Mini IPO financing for Early Stage companies
Mini IPO financing for Early Stage companies
The biggest problem problem of financing companies through VC equity rounds is dilution.
Giving away too much equity in subsequent rounds leads to potential change of control of the company at board level (who, for instance, can decide to replace the CEO, typically one of the founders)
This can happen as soon as in a 2nd or 3rd financing round, Series B onwards.
What if you could skip the lines and access capital markets & institutional investors directly? (i.e finance your company in a stock market a.k.a mini-IPO)
As long as you have proven traction from market (growing demand and revenues), fundraising from capital markets is possible and can be fairly straight forward with our methodology.
It gets even better, your company doesn't need to be profitable but rather have a long term path to profitability where current demand acts as a proxy.
We do this by looking into IPO windows of opportunity in Secondary Stock Markets such as TSX-V (Toronto Venture Exchange) for which we have streamlined a process allowing companies to list themselves and raise the equivalent of a Series B or C financing in less than 5 months (providing all preparation work has been done).
This is not for everyone obviously, there are caveats, new processes, lots of prep work, due diligence, audits, but this financing process works beautifully for those early stage companies with internationalization strategies, senior management commitment and strategic plans to grow inorganically (M&A and target acquisitions financed through the IPO process)
If you have read so far, word of caution: this is NOT and exit! it is an alternative financing mechanism although it certainly will provide liquidity to former & new shareholders and investors, company management and even employees eventually down the road.
For this process to work we suggest to set up an 'insider m-IPO office', where, one of our partners, acts as an interim officer of your company, either as a special financial advisor, board observer, board director or EIR (Executive In Residence)
And not as a traditional external service provider (typical fees for an IPO process can easily go well beyond $750K in fees).
In this way we can fully represent the company in front of key stakeholders, underwriters, institutional investors and make sure critical elements such as the Test the Waters process run smoothly and transparently, while containing costs.
Therefore, from an incentives point of view, our approach is based on internal compensation - equity schemes preferred, which means, we do prefer to align entirely with your company's interests throughout the m-IPO journey (vs traditional compensation models a.k.a working for a fee).