We organize angel and venture financing for projects and companies, which decided to invite an external financial investor with the goal to activate development and improve methods of company’s management.
The goal of business angels’ investments and venture capital funds is price growth of companies that are being invested in. The main profit is received at the “exit” through sale of their share for the price, largely greater than invested. Sale can be carried out on a stock market, to a strategic investor, other investment fund or to the company’s founders.
Advantages in attracting angel and venture investments:
- Receiving financing for a long term (3-7 years), without mortgages and guarantees, for a share in the business.
- Access to experience of corporate management.
- Access to the advanced branch experience..
- Access to knowledge and business ties of investors in financial and investment communities.
- Improvement of the company’s reputation. Companies that have professional investors and independent directors as shareholders receive some sort of a “quality sign” in the eyes of financial and investment communities.
The Company can use means received as a result of angel or venture financing for the following goals:
- Financing of acceleration of organic growth
- Financing of absorption of other companies
- Balancing of the credit portfolio
Venture investment is expedient to attract when there is a necessity for additional financing of an investment program (for 2-5 years) largely exceeds your own and loaned means.
On the early stages of business’ development (“seed” or “start-up”), investments are mostly carried out by business angels – physical or legal persons investing partially their own means. Volume of business angels’ investments in one company can be from tens of thousands to several million dollars.
After come the venture (from 2 to 200 million dollars), and then direct investments.
Investors usually buy from 25% to 49%, rarely up to 75% of additional emission or current shares of the Company.
List of important criteria, taken into consideration by investors-angels and venture capital funds to make a decision on financing:
- Understandable business model and transparent ownership form, providing investors with control over profit from company’s activity.
- Market / sphere appeal. Potential for consolidation.
- Leadership of the company in its segment of business. Geographical leadership. Uniqueness of the product or services of the company and obvious competitive advantages.
- Presence of long-term licenses, advanced trade marks, high cost of process equipment, which is a high entrance barrier for new competitors in the market.
- Loyal consumers, presence of a well known brand in the market are an additional advantage.
- Precise strategic orienteer on the horizon of 3-5 years. Bright understanding of why the company needs additional investments. Presence of opportunities for increase of the company’s cost.
- Strong professional management with a successful experience in the sphere, interested in the businesses development as well as united with investors with an understanding of perspectives and motivational system. Adherence to the civilized methods of management. Ability of management to realize declared strategy and aiming at fast growth, expansion of business and high rate of organizational changes.
- Entrepreneurship team has to have the ability to constantly develop its competency in commercialization of possessed innovational techniques.
- Profit of investment projects has to satisfy expectation of investors at the return of investments (as a rule, the internal norm of profitability of investments should not be less than 25 %).
- Built or planned to implement system of corporate management.
- Understanding and goal-oriented investors and management to strengthen management and increase the business’ cost via implementation of modern techniques of management.
- Transparent financial situation, not burdened by hopeless or artificially created debts.
- Clear vision of investor’s exit.
Success of angel and venture investments is mostly achieved though formation of favorable business relations between investors, owners and managers of the company, their united work as a team. That is why the key criterion of choosing an investment object is potential, professional and ethic qualities of entrepreneurs and their management teams.
We constantly track information on the following questions:
- Which investment funds have in their investment declaration have this or that country
- What are the general volume of shares under the fund’s control and volume of free shares
- Priority spheres for the fund’s investments and additional criterion of selection of investment projects
- Priority stages of investing (seed, start-up, expansion, etc.)
- Minimum and maximum volumes of investments
- Conditions on volume of purchased part of the business.
IC “SMOLENTSEV & Partners” has established business relations with a big amount of investor-angels and venture capital funds from different countries, which allows to carry out the process of attracting a financial or strategic investor on the best conditions for our clients.
If you have a project that meets the criterion written above, please send us the business plan: firstname.lastname@example.org. Our employees will contact you. Recommendations for the business plan you can view here.
We don’t sign a Non-disclosure Agreement. We regularly get a great amount of business plans, which makes excessive bureaucracy impossible.
We offer the following scheme for cooperation to entrepreneurs:
1 stage. Formation and presentation of the business’ Teaser to potential investors.
1.1 Basic information about the business – sphere of activity, strategy, factors of competitiveness, key and operational estimates, shares, etc.
1.2 Formation of a Teaser about the business. It has to be strictly focused on the business’ description as an attractive share and an interesting investment opportunity (perspectives of the sphere, competitiveness and so on). The Teaser does not specify information on the price parameters of the investment proposal, but can include offers on solid conditions of the contract (volume of the package, conditions of exit / stable position of current owners, direction of expenditures of attracted means, etc.)
1.3 Formation of a list of potentially interested investors, sending them the Teaser and receiving a reply.
Time frame of the stage: 1 – 2 months.
2 stage. Formation / justification of the price position by the owners.
2.1 Development and coordination of the company’s business model. Description of the main business processes with indication of their key characteristics.
2.2 Development of the business’ financial model and identification of the price orienteer of the contact.
Time frame of the stage: 1-2 months.
3 stage. Formation of a detailed presentation and an investment offer.
3.1 Active dialogue with investors and managers on identifying and developing key factors of investment appeal of the company.
3.2 Formation of a presentation including an investment offer.
3.3 Directing the presentation to potential investors and beginning of negotiations.
Time frame of the stage: approximately 1-2 months.
4 stage. Carrying out a Road-show and maintenance of the active phase of negotiations with potential investors.
Using the road-show tool, IC “SMOLENTSEV & Partners” goal is to acquaint potential national and foreign investors with the partnership opportunity with the presented business.
Further action plan is defined by concrete negotiation process, which often includes granting additional information, answers to question, justification of price or other parameters of the deal, coordination of the main conditions of the agreement (mutual obligations of the customer and the seller), etc.
Time frame of the stage: approximately 1-3 months.
5 stage. Preparation and signing documents, carrying out the deal.
Content of this stage is fully defined by coordinated actions from the previous stage.
Time frame of the stage: approximately 1 month.
6 stage (additional). Extra publicity.
It is possible that in the project’s realization process extra publicity will be needed for the business. In that case, we carry out a complex of PR-events, organize interview publications, articles, owners can be shown on TV, etc. In the case of absence or minimum presence in Internet, we organize Internet-representation of the company. Informational and advertisement materials are treated mentally comfortable by the potential investors.
Time frame of the stage: during the entire process.
7 stage (additional). Supporting the project till investor’s “exit”.
Upon wish of the project’s initiators and investors, we can lead the entire process of venture investment till the moment of investor’s “exit” from the project, while forming and improving system of corporate management, implementing International Standards of Financial Reports, organizing release of securities and realizing other events to increase capitalization of the business.
Presentational information is formed in standard form in English and Russian languages. When necessary using any other language.
One of the most important standards of our work is strict confidentiality of information received from the Clients.
We provide safety of information and documents, received and developed throughout work, and do not disclose them without Client’s permission, as it is established by the international norms of professional etiquette.