Maturity Stage: Late-Stage Capital Raise Guide
Capital raising is a thorough and enduring process and will take quite the planning and preparation. Especially as the business develops into the maturity stage, this process can become more complex and intense. This is for multiple reasons but being as you are in the later stages of the business, the amounts raised are typically much higher and you are dealing with high profile investors.
The investors that are involved in these stages of a business are looking for leaders and large markets. They are typically financially driven and looking for those who have a strategic plan in the market. They will also usually focus on numbers and a large and continuous revenue stream.
Late-Stage Company Attributes:
- Veterans of venture capital financing
- Annual revenue numbers are more than seven digits consistently.
- Outgrown their PEO and rely on an in-house HR system.
- M&A suitors compete for their attention at this stage.
- High return with moderate risk.
Late-Stage Investors:
- Traditional VC
- Growth or Mezzanine Fund
- Hedge Fund
- Private Equity Fund
- Sovereign Wealth Fund
- Large Foreign Internet Company
- Strategic Investors
- Public Market Investor
- Angel SPV (Special Purpose Vehicle)
What defines A Late-Stage Company?
A late-stage company is typically defined as being six months to a year away from an exit, such as an IPO. Later stage investments involve Series C and D rounds and beyond. Each round may raise between $50+ million and have company valuations of $115 million and above. These companies may also be undergoing an M&A, a SPAC, IPO, reverse merger, etc.
What is Mezzanine Financing?
Mezzanine capital, typically provided by private equity firms, is capital provided either as equity, debt, or a convertible note that is provided to a company just before its Initial Public Offering. This round of funding is anywhere from $10 million to $500 million.
Companies use mezzanine financing to achieve goals that require capital beyond what senior lenders will extend. Mezzanine investors generally take less risk since the company is solid at this point in the lifecycle and prepared to cash-out quickly. They are seeking liquidity as the company begins to position itself for an acquisition or an initial public offering. The companies in this stage of funding may be cash flow positive and introducing their product into indirect markets.
How We Can Help with Your Late-Stage Capital Raise
Investments made early in a company’s lifecycle typically require a long holding period and can be riskier compared to a late-stage company. Our Capital Raise advisors can help you understand which lifecycle stage and which investments should be made to accurately capture the risks and return characteristics associated with that investment. The needs and wants of the company in this later stage will differ extremely from those of the earlier stages of the business.
Let us help you prep for your late-stage Capital raise, M&A, SPAC, or IPO. We have the processes in place and the expert consultants to guide you through the process seamlessly. One of our biggest value propositions is looking at the company from the bottom up, not the top down. We can provide a unique follow-through from strategy to execution of your deal or capital raise by going through these steps:
- Discovery
- Roadmap & Proposal
- Acquisition List
- Financials
- Pitch
- Due Diligence
- Close
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