Every year Billions of dollars are invested into technologies that have transformed the way watch content, order transport, listen to music, and book accommodation. Netflix, UBER, Spotify, and Airbnb.
The goal of this investment is for software and data to remove friction from connecting consumers and their desired outcomes/experience.
In a B2B environment, this is also the case. SaaS Platforms have transformed the way companies engage with software. In a survey conducted by BetterCloud, 73% of organizations who responded said that at least 80% of their apps would be SaaS by 2020.
The survey highlights that when companies are looking at purchasing SaaS solutions, their criteria centers around cost, security, ease of use, integrations, scalability, reporting, and analytics.
The question which drives our thinking is, how can we utilise software to remove friction from the private capital raising process, to save time and money while also improving access to investors, efficiency, and analytics?
Current Private Capital Raising Experience
Currently, you have the process focused around personal networks, legacy systems, isolated solutions, manual processes, virtually no deal analytics, lack of investor connectivity, and a fragmented ecosystem with minimal co-operation and online platforms charging 6 to 8% and competing with the professional service firms.
• Investor attraction and discovery is endlessly frustrating for companies and advisors.
• Money and time wasted due to isolated solutions, fragmented ecosystems, no integration of software, and little guidance of best practices.
• No analytics and defined processes, companies are made to feel like capital raising is a mysterious art in which they have no power.
• Online platforms are charging 6–8% for capital raising. The challenge with platforms charging this fee is that they 1) compete with existing providers and 2) become corporate advisors with a website.
Learning From a Frustrated Ecosystem
No one over the last ten years has ever said that they enjoy the capital-raising process. Companies, Investors, and Professional Services are all frustrated and wasting a significant amount of time and money on redundant processes. For everyone, this means considerable opportunity cost.
• Absolutely no one in the 10+ years of Wholesale Investor has said they enjoy the capital-raising process.
• The common belief that software can play a role in improving it.
• Currently, online platforms are targeting retail investors and aiming to charge a 6–8% success fee and are effectively advisors with a website.
• Current platforms compete with the existing industry, not ENABLING.
Software Driven Future of Raising Capital and Deal Making
• The future of capital raising is subscription-based deal-making. It will utilise AI-driven matchmaking, active engagement, frictionless end to end transaction transactions, liquidity potential, and the creation of more opportunities.
Understanding software-driven capital raising;
• Going forward, capital raising learns from the most successful technology, platforms, and marketplaces it has been investing in.
• It learns that no one owns investors, and they have multiple sources of deal flow with no exclusivity to any advisor, friend, investment bank, platform, or private bank.
• Subscription-based billing is the path forward.
• The software will lead the matchmaking and analytics, with the real skill being provided by advisors in the deal creation and structuring.
COMPANIES: Investors discover or AI-matched to them. The end-to-end process saves time and money. The business impact of a capital raise on a business is reduced.
INVESTORS: Are aggregated and matched with relevant deals, with access to the information they desire.
INDUSTRY: Utilise end to end software, streamline processes, improve efficiency, access to analytics, and ability to make more money by working on more opportunities. For a Corporate Advisor who works on 4 to 6 opportunities per year, now they can work on 8 to 12.
LIQUIDITY: With the aggregation of deals and investors, dealmakers can create liquidity opportunities.
Recently, I hosted a webinar on this subject. In the webinar, I talk about what we see as the future of capital raising and deal-making and how we are working towards the challenges faced by companies, dealmakers, and investors alike. You will also receive an insight into some of the new features and modules we are building on our platform, CRIISP.
C.R.I.I.S.P - Our Vision of The Future
CRIISP - Capital Raising Intelligent Investment Secondary Platform. The name alone guides us as to what we are building. From our perspective, this is the logical evolution of capital raising and investment in emerging growth companies.
We are taking a software-driven, end-to-end, ecosystem enabled approach that will utilize detailed analytics and AI to assist companies, investors, and professional services in their deal-making.
MYTHS vs REALITIES - 3 Daily Myths We Encounter
IT TAKES 2 - 3 MONTHS TO RAISE MONEY: This is the greatest myth told about raising money. This pressure is placed on Founders / CEOs, from Advisors and Investors. When I host workshops for 100 to 150 people, and I ask, “who has been able to complete a capital raise from start to finish in under three months?” typically on 1 or 2 hands go up.
I have never seen an advisor offer 2-month mandates. Ask a General Partner of a VC or PE Fund if it took them less than two months to raise their capital from LPs. The truth is, everyone is raising capital, or they are raising friends.
ADVISORS AND COMPANIES ARE USING ANALYTICS FOR THE CAPITAL RAISE: From our survey, less than 15% of advisors and companies are using analytics for their capital raise.
VCs ARE THE MAIN INVESTORS: It is well known that VC’s invest in less than 1 in 100 (sometimes 1 in 1000) companies they meet. So how are all the other companies been funded? From our observations, private HNWs, Industry participants, and Family Offices drive a lot of the investment in the venture space.
Digital Security Offerings (DSOs)
Right now, hundreds of millions of dollars are being invested in Exchanges and Registry services driven by distributed ledger and blockchain technology. While it is still early days, there is little doubt that DSOs will become a standard part of how companies and projects raise money.