FREQUENTLY ASKED QUESTIONS
How much of my company will I have to give up to raise money?
How do I support or justify the valuation of my company?
What do Venture Capital/Private Equity Investors want?
What does the Capital Asset Pricing Model have to do with this?
How much will it cost to raise money using ACS?
Where should I start?
How much of my company will I have to give up to raise money?
You might not have to give up any ownership in your company if you can secure debt financing from a commercial bank. Most financings involve a package of both debt and equity. Preferred stock is often the preferred vehicle for investment. Think of preferred stock as equity stock shares with debt-like features, or debt with the right to convert into equity. ACS can help you optimize the structure of your financing.
How do I support or justify the valuation of my company?
Investment Bankers rely on four primary methods to value a business: 1) comparable public company valuations, 2) comparable M&A transaction valuations, 3) detailed financial analysis of the assets and liabilities of the business and 4) discounted cash-flow analysis of expected future results. ACS can help you identify the key factors and data that will affect the valuation of your enterprise.
What do Venture Capital/Private Equity Investors want?
A VC/PEI will expect to realize $3-to-5 for every $1 they provide, and they want to realize their return in 3-to-5 years. You need a business plan that shows how you are going to take $1 today and turn it into $3-5 that you can give back to an investor in 3-5 years.
What does the Capital Asset Pricing Model have to do with this?
The Capital Asset Pricing Model (CAPM) plots expected returns against risk. The riskier the investment, the higher the return that is expected. Getting the best deal on your financing is principally about assuring your investors that there is minimal risk in investing in your company. ACS can help you quantify and explain the risk for stock holders and investors.
How much will it cost to raise money using ACS?
6% of all equity financing raised, plus 4% of any mezzanine (subordinated debt) financing, plus 2% of any senior debt raised. ACS will also receive a warrant or option to purchase three percent (3%) of the post offering total outstanding shares of the Company, at a price per share equal to the per share price paid by investors at closing. An initial fee or monthly work fee will also be charged but will be fully credited against any success fees earned.
Where can I get money to start my business?
If you’re a start-up, put in your own money and borrow from friends and family. You’ll get the best deal possible. “Happiness is a positive cash flow” and if you achieve positive cash flow (where the money coming in is greater than your expenses), everything else will come later.