Capital Raising Process: Materials

Careful preparation of the materials needed for the capital raising process is a key factor for success. These materials, such as the company’s presentation and financial forecasts, serve as an important communication tool that helps convey the company’s value and potential to prospective investors during a fundraising process. During the preparation phase, it is crucial to identify and clearly document the project’s core selling points in a compelling manner. This article discusses the types of documents required in the preparation process and why high-quality execution is essential. 

You can also take a look at our previous blog post about the preparation phase here.

Key Materials 

Investment Memorandum 

The investment memorandum is a foundational document in the capital raising process, offering a comprehensive overview of the company’s business. It typically includes several essential sections: 

• Market Research: In-depth analysis of the markets in which the company operates, including market size, growth opportunities, and competitive landscape. 
• Business Description: Detailed description of the company’s business model, value proposition, and competitive advantages. 
  • Organization: Information about the company’s organizational structure and key personnel. 
  • Tangible and Intangible Assets: A list of the company’s assets, including inventions, machinery, equipment, software, etc. 
  • Plan: The company’s strategy and roadmap for achieving its goals. 
    
    
• Technology Description: Comprehensive explanation of the technology used or developed by the company, along with its competitive advantages. 
• Financial Overview: A summary of the company’s financial position, including profit and loss statements, balance sheets, and cash flow forecasts. 

Financial Forecast and Modelling 

Financial forecasts help investors understand the company’s long-term financial goals and assess their credibility. This includes: 

• Historical Financial Data: The company’s actual past financial performance, which provides a basis for future projections. 
• 5-10 Year Projections: Forecasts for profit, balance sheets, and cash flow over a 5-10 year period. 
• Documented Financial Goals: Clearly defined financial goals that help investors evaluate the feasibility of the plan, as well as the risk profile and suitability for their own risk tolerance. 
  

Teaser 
The teaser is a brief presentation document shared with prospective investors during the first contact. Its purpose is to generate interest in the project by providing essential information and highlighting key selling points without disclosing too many details or sensitive information. 

Management Presentation 
Management presentations are designed to support the company’s leadership in presenting its growth plans to investors. These presentations should align with the management’s communication style and effectively convey the company’s vision and strategy. 

NDA (Non-Disclosure Agreement) 
The non-disclosure agreement (NDA) is an important document that protects the company’s sensitive information. The NDA helps prevent information leaks and protects the organization, for example, from recruitment-related risks. 

Data Room 
The data room is a digital environment prepared during the capital raising process. It contains additional details, such as financial and contractual documentation, as well as supplementary materials relevant to the company’s business, such as technology descriptions, patents, etc. The contents and timing of the data room depend on the project’s nature. 

Why High-Quality Documentation is Essential 
High-quality documentation is critical to the success of the capital raising process. These documents convey the company’s value to investors, and careful preparation adds significant value to each party who receives the information. Well-prepared documentation also helps investors understand the company’s goals, capital requirements, and potential returns, which increases their confidence in the project. 

Preparing these documents is a multi-step process that requires both experience and expertise. It can often take a significant amount of management’s time, so utilizing external experts can be an effective solution for ensuring quality and efficiency. 

Summary 
High-quality documentation is essential for a successful capital raising process. Thoroughly prepared materials not only attract investor interest but also help them evaluate the company’s value and potential. Quality materials reflect the company’s professionalism and support the success of the capital raising process.  

Author of the blog:

Miikka Lievonen
Director, Grannenfelt Finance
miikka.lievonen@grannenfeltfinance.fi 
+358 50 554 5844
LinkedIn-profile

The writer has 10 years of experience working in corporate finance and capital raising related projects. He has advised multiple growth companies in fundraising including Vastuu Group, Beely, P2X Solutions, and Varjo.