Procuring Capital for Entrepreneurs Worldwide
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FAQ
2. What should be included in a funding package? Other than the normally accepted documentation for loan/funding approval and acceptance, there may be additional information requests by a specific investor/funder at a later stage. This information varies; however, we will assist in all areas to insure that proper documentation is available to the funder for a swift reply.
3. How long will it take you to reply to my/our initial request? Unless the request is unusual or complex, we will reply within 1 to 2 banking days.
4. Are you a Lender or Investor? Inter-fund is not a Lender or Investor; we are a firm that aligns businesses seeking capital to Lenders with that capital. The real plus in working with us is that we already have the Lenders and Investors listed with our network.
5. Why do you require a retainer fee upfront (when we have approved your application, not before); why is it not possible that I pay upon closing? The first years that we were in this business we didn't charge a penny and lost lots of money on behalf of our Clients. We had high expenses, which could not be recovered since many of our Clients turned out to be not too serious. Many applicants asked us to arrange a loan, and after a while it happened regularly that they didn’t send us adequate documentation, or they did not need the funds anymore, or their phone was disconnected, or they simply disappeared, but in the meantime we spent lots of time (an average of 150-200 hours on each project) and money on their behalf. Of course we don’t say that you’re not serious, but there’s really no other way. Upon advice of our lawyers and accountant we now work on this basis, which is strictly according the Dutch law. In a nutshell: Professional Services are not for free, if they are you should really worry about their quality. We put forth our best efforts; if anyone is not prepared to pay our retainer or wishes to go into negotiation regarding this matter, then please stop reading here, since we will not respond to requests or comments to pay our retainer at closing.
6. Would you make an exception on your retainer fee, when I promise to pay a higher commission at closing? There are no negotiations or exceptions. We do not accept stock in a company nor an extra "piece of the action" when a deal is successfully funded, nor do we accept “escrow payments”. We receive and review hundreds of executive summaries and/or businesses plans a month, and only have the capacity to process a few monthly, and prefer the viable projects of these clients that trust us and pay, over these trying to negotiate regarding the retainer.
7. If you do not intend to pay for our services, then please re-consider your position and don’t contact us, since we definitely will not reply.
8. I already have a complete and perfect Business Plan or PPM, why do you still need a retainer? We would still have to spend the same hours by calling and e-mailing various Investors/Lenders as explained previously.
9. How long will it take to close? Once a project/proposal is approved by an Institution, it depends entirely upon the speed in which the Client conforms to any additional requests for documentation from the funder. This process can take as little as a few weeks for to up to 45 to 60 days.
10. Can you guarantee that my project will be funded? If we accept your project (we decline more than 100 a month) and did our initial investigation, the chances of arranging an Investor or Lender are 100%. From experience we know that things can go wrong between borrowers and lenders/investors, but if they go wrong, the borrowers are usually to be blamed by not giving the lenders/investors adequate information or not being cooperative when requested. In a nutshell: if we do not believe that your project is viable and will not receive funding, we will not accept your project.
How much does 100% project funding cost?
For clarification it seems that over the past few years the general Client and amateur Broker have adopted the word “upfront fee” as a catch-all phrase for any legitimate cost in doing project funding.
Therefore does 100% Project FUNDING? = No “Upfront Fees”? Let's examine:
Funding Transaction EXAMPLE:
Law Firm, Investment Bank, Securities Dealer, Management Consultant Firm has inquiry for a 100MM USD capital raise. The Firm will hold a consultation (typically paid for and credited back to Client) and determine the viability of the project. If acceptable Firm will ask to be retained to structure deal for compliance. Once completed Firm will refer to their funding partner i.e. Fund.
Experienced companies who reliably successfully obtain funding for their projects know that they must (and always do) spend the following typical average budgets on required licensed services (to other various firms) to make their project and collateral bankable:
• Law firm work on preparation and positioning the project $ 100,000
• Authorized underwriting to endorse and certify project $ 40,000
• Securing third-party assets as outside Collateral $ 100,000
• Licensed valuations certifying the monetizing value of assets $ 30,000
• Licensed transaction structuring and certification of structure $ 50,000
• Law firm management and facilitation of all aspects of transaction $ 150,000
Total Average Real Costs of Making “Bankable” with Collateral = $ 500,000
The majority of capital-seeking “borrower” clients mistakenly begin by prematurely “shopping for loans”, wrongly assuming they are in any position to do so. They start by asking premature questions about “terms of the loan” and how fast it can be “given”, completely forgetting about whether they are prepared and qualified yet to receive one.
All companies who successfully obtain project funding always spend hundreds of thousands of dollars on the right licensed institutional services and certified preparation work, to make sure they will be qualified, have a “banking compliant” documents package, and have the right kind of collateral that can be widely accepted.
CONCLUSION:
Even though 100% Funding can be available, there will always be soft cost associated. That means the Client must have some liquid capital (as opposed to usual 20-50%) in order to realize the transaction.
By Dale C. Changoo
Managing Principal at Changoo & Associates
Therefore does 100% Project FUNDING? = No “Upfront Fees”? Let's examine:
Funding Transaction EXAMPLE:
Law Firm, Investment Bank, Securities Dealer, Management Consultant Firm has inquiry for a 100MM USD capital raise. The Firm will hold a consultation (typically paid for and credited back to Client) and determine the viability of the project. If acceptable Firm will ask to be retained to structure deal for compliance. Once completed Firm will refer to their funding partner i.e. Fund.
Experienced companies who reliably successfully obtain funding for their projects know that they must (and always do) spend the following typical average budgets on required licensed services (to other various firms) to make their project and collateral bankable:
• Law firm work on preparation and positioning the project $ 100,000
• Authorized underwriting to endorse and certify project $ 40,000
• Securing third-party assets as outside Collateral $ 100,000
• Licensed valuations certifying the monetizing value of assets $ 30,000
• Licensed transaction structuring and certification of structure $ 50,000
• Law firm management and facilitation of all aspects of transaction $ 150,000
Total Average Real Costs of Making “Bankable” with Collateral = $ 500,000
The majority of capital-seeking “borrower” clients mistakenly begin by prematurely “shopping for loans”, wrongly assuming they are in any position to do so. They start by asking premature questions about “terms of the loan” and how fast it can be “given”, completely forgetting about whether they are prepared and qualified yet to receive one.
All companies who successfully obtain project funding always spend hundreds of thousands of dollars on the right licensed institutional services and certified preparation work, to make sure they will be qualified, have a “banking compliant” documents package, and have the right kind of collateral that can be widely accepted.
CONCLUSION:
Even though 100% Funding can be available, there will always be soft cost associated. That means the Client must have some liquid capital (as opposed to usual 20-50%) in order to realize the transaction.
By Dale C. Changoo
Managing Principal at Changoo & Associates
Ways to Raise Money
Series A, B, C, D & E Funding: Start-up Funding Series Explained
The task of raising equity funding for your start-up tends to be an arduous and stressful one. Placing the future of your endeavour in the hands of someone else is never easy, but if you successfully secure a windfall that’s right for you, it could be the first step towards making your dreams a reality.
Securing funding has a habit of taking founders by surprise more often than not. Start-up owners typically underestimate the complexity of the process. This may not be surprising though – most entrepreneurs have lived and breathed their business for some time before seeking capital. To them, the whole concept is simple.
You may be convinced that your project will end up as a resounding success, but getting venture capital firms to agree can be another matter entirely.
Time really does mean money for start-ups, and waiting on decisions can be a costly process at such a delicate time in a company’s lifespan.
However, despite the long waits and potential negotiations over equity, thousands of start-ups successfully raise the funding they need every year. This shows that, although venture capital funding can be the source of stress for business owners, it remains one of the best options out there for scaling your business accordingly.
If you’re interested in raising capital for your endeavour, it’s important to know that funding comes in many stages. Let’s take a deeper look at the intricate form many venture capital funds take.
The task of raising equity funding for your start-up tends to be an arduous and stressful one. Placing the future of your endeavour in the hands of someone else is never easy, but if you successfully secure a windfall that’s right for you, it could be the first step towards making your dreams a reality.
Securing funding has a habit of taking founders by surprise more often than not. Start-up owners typically underestimate the complexity of the process. This may not be surprising though – most entrepreneurs have lived and breathed their business for some time before seeking capital. To them, the whole concept is simple.
You may be convinced that your project will end up as a resounding success, but getting venture capital firms to agree can be another matter entirely.
Time really does mean money for start-ups, and waiting on decisions can be a costly process at such a delicate time in a company’s lifespan.
However, despite the long waits and potential negotiations over equity, thousands of start-ups successfully raise the funding they need every year. This shows that, although venture capital funding can be the source of stress for business owners, it remains one of the best options out there for scaling your business accordingly.
If you’re interested in raising capital for your endeavour, it’s important to know that funding comes in many stages. Let’s take a deeper look at the intricate form many venture capital funds take.
Pre-seed and seed funding
Naturally, pre-seed funding arrives first for businesses. At this stage, the onus is on founders to work on building some form of proof-of-concept or product prototype. Raising money to develop this is typically a task that the founders themselves need to work out on their own. At this stage, funding is most likely to arrive in the form of personal savings, family and friends, angel investors, incubators or crowd funders.
Of course, the money needed at the pre-seed stage of funding will vary depending on the business or the type of products or services it’s planning on offering.
After pre-seed comes seed funding. This will likely be the first instance of funding that your company rises. The name is self-explanatory, but to ensure crystal clarity – the seed represents the early finance that promises to grow your company.
Much like the case of pre-seed funding, seed funding can be raised from an array of sources, like family and friends, as well as crowd funders. However, at this stage, the most common form of investor tends to be angel investors.
Sadly, seed funding signifies the first potentially volatile stage in your start-up’s development. Many businesses fail to find the funding that they need in order to progress beyond the seed stage. If they run out of money before being picked up by investors, it’s known in the industry as ‘running out of runway’.
Sometimes this process isn’t nearly as arduous as it appears, and businesses decide that there’s no need to raise any further money – thus deciding to scale without looking for more windfall and leaving the start-up funding series at an early stage.
Average Funding Amount: <$1 million.
Series A
There should be clear evidence that the company is ready to go to the next level. This evidence can be based on established interest, early revenue or Key Performance Indicators that show there’s enough reason to continue in development.
The Series A round of investment tends to rely on start-up’s having a plan for developing a functioning business model, even if it’s not yet been proven yet. At this stage, any windfall is expected to be converted into a credible revenue stream.
Series A is a pivotal part of a start-up’s progression, and thus funds usually climb to between €2 million and €15 million. However, with higher windfalls comes the demand for more substance. Investors will be seeking out more tangible evidence than a founder simply having a good idea, and start-up owners will need to prove that a good idea can be converted into a profitable business.
This stage in a company’s funding is usually driven by a single investor that orchestrates the whole of Series A. Finding that first investor is perhaps the single most important part of the financing of a new business – this is because once one commits to your start-up, others tend to follow suit.
Likewise, losing your first investor can be a hammer blow, because there’s always a risk that others will pull the plug too.
Venture capital firms tend to bankroll Series A funding, but there could be some involvement from angel investors. Likewise, equity crowd funders have risen in popularity over the previous five years.
This stage in a company’s funding is usually driven by a single investor that orchestrates the whole of Series A. Finding that first investor is perhaps the single most important part of the financing of a new business – this is because once one commits to your start-up, others tend to follow suit.
Likewise, losing your first investor can be a hammer blow, because there’s always a risk that others will pull the plug too.
Venture capital firms tend to bankroll Series A funding, but there could be some involvement from angel investors. Likewise, equity crowd funders have risen in popularity over the previous five years.
Interestingly, while start-ups will almost always find themselves in choppy waters throughout the funding process, arriving at Series A represents a significant step towards stability, with the typical progression rate from Series A to B start-ups sitting at a comparatively appealing 50%.While making the transition from seed funding to Series A represents one of the biggest leaps of faith for a start-up, once a willing investor is found and is ready to help you scale, the early Series could be seen as statistically less volatile than seed rounds.
However, with that said Series A and B funding only represents the eye of the storm, with average start-up failure rates leaping with every subsequent stage your business embarks on. By the time you arrive at the latter series of investment, your chances of progression fall to just 17.4%. The good news is that with the right level of investment and scaling, your business should be up and running and progressing fast enough to bypass those difficult latter stages of investment to enter the world as a fully-fledged scaled business.
Series B
Series B is all about scalability. You need to have enough evidence that you can expand your client or customer base from 200 to 2,000, or 200,000.
This is also the time for you to consider boosting the number of workers to aid your proportions for scaling. Series B will signal the beginning of your transition from an establishing company into a competitive force in the industry. You’ll need resources to strengthen your workforce and exposure to new customers.
This will call for the recruitment of talented individuals to help with your strategies, and more investments will be focussed towards the wage bill of skilled staff.
The level of investment brought in by Series B funding typically ranges from €7 million to €10 million, and by now companies can expect valuations of between €30 million and €60 million.
Due to the significant figures associated with this funding stage, the task of investing is usually undertaken by venture capital firms. Each series arrives alongside a fresh valuation for a start-up, so most investors tend to reinvest to ensure their stake stays strong.
Some venture capital firms operate solely to help late-stage start-ups, and if you’re looking for a little extra windfall, it could be worth seeking them out.
Series C
It’s common for Series C businesses to start expanding internationally and reach wider audiences. It’s also possible that they’re seeking a chance to build on their company value before going for an Initial Public Offering (IPO).
Series C is often regarded as the final round of fundraising that a business engages in, but it’s not uncommon for some companies to move on to Series D and even E.
The average sum raised by businesses during the Series C stage of fundraising stands at around € 26 million – approximately €20 million.
According to the graph above, start-ups funding Series C indicates a significant transition from the seed funding ‘Valley of Death’ stage of a business’ progression towards a reliable stream of profit and the latter stages of their VC lifecycle.
By this stage, you may be ready to launch an IPO, or fully immerse yourself into the market. However, moving into Series D of fundraising isn’t necessarily a bad thing and entering subsequent funding stages can work wonders in ensuring that you’re developing a more sustainable business model that’s better placed to create steady profits.
Series D
Firstly, the move could be down to you finding a new means of expansion before angling for an IPO. This extra level of expansion could prove a vital stepping stone before you take the leap of faith into going public.
It’s also possible that your company simply wanted to stay private for a little longer before making the switch towards an IPO.
Another more concerning reason could be down to your business failing to meet its expectations from Series C. Known as a ‘down round’, this scenario would require Series D to act as a safety net in helping to ensure the company’s future isn’t negatively affected by poor returns on investment.
While early rounds tend to run up consistent figures as far as investment is concerned, it’s trickier to pinpoint the level of funding acquired in Series D, because of the various circumstances involved. When entering Series D of funding, it’s important for founders and decision-makers to take a long look at business performance and the plans in place, and cost up the required figures accordingly.
Series E
Series E is a fundraising round that acts very similarly to that of D. Perhaps you’ve missed your previous targets, or maybe you’ve wanted to remain private further into the future?
Either way, it’s very rare to see companies progress to the Series E stage of investment, and founders usually make the move due to an unforeseen circumstance that wasn’t accounted for in earlier business plans.
This isn’t to say that moving into Series E is a bad thing, and it could prove highly lucrative for your future profit margins.
Once again, the level of finance raised at this stage is highly subjective, and dependant on too many variables to quantify. But Remember, at all phases of your start-up’s life, make sure you keep a level head and approach your plans with a critical eye – and there’s no reason why each stage of your fundraising rounds can’t be a resounding success.
Either way, it’s very rare to see companies progress to the Series E stage of investment, and founders usually make the move due to an unforeseen circumstance that wasn’t accounted for in earlier business plans.
This isn’t to say that moving into Series E is a bad thing, and it could prove highly lucrative for your future profit margins.
Once again, the level of finance raised at this stage is highly subjective, and dependant on too many variables to quantify. But Remember, at all phases of your start-up’s life, make sure you keep a level head and approach your plans with a critical eye – and there’s no reason why each stage of your fundraising rounds can’t be a resounding success.
Series F, G, H and Beyond
As we touched on in Series E of funding, it’s possible for your start up to not quite see itself as prepared for an IPO or fully immersing itself into the market and subsequently choosing to engage in more rounds of funding.
In the wake of the COVID-19 pandemic, more businesses have been entering the latter stages of funding to ensure that they survive without having to suffer heavy losses due to a lack of productivity or consumer power.
Some start-ups have found great success from these late stages of funding. Notably, Couchbase managed to generate over $105 million in a bid to enter the global markets with a better state of preparation despite COVID.
While the latter series of fundraising may feel like a level of failure for your start up, it’s important to remember that every business is different and some endeavours can comfortably enter new rounds of funding for a variety of reasons that don’t signify that failure’s inevitable.
In the wake of the COVID-19 pandemic, more businesses have been entering the latter stages of funding to ensure that they survive without having to suffer heavy losses due to a lack of productivity or consumer power.
Some start-ups have found great success from these late stages of funding. Notably, Couchbase managed to generate over $105 million in a bid to enter the global markets with a better state of preparation despite COVID.
While the latter series of fundraising may feel like a level of failure for your start up, it’s important to remember that every business is different and some endeavours can comfortably enter new rounds of funding for a variety of reasons that don’t signify that failure’s inevitable.
Contact
- Dreef 17, 4586 AL Lamswaarde, Hulst, Netherlands