TIPS TO GETTING YOUR FIRST INSTITUTIONAL MONEY

Tomlinson Advisory Group, LLC works with clients new or inexperienced in raising institutional money, whether from private equity, venture capital, high net worth individuals or otherwise.​
Here are tips to getting your first institutional money:

​ 1.       Raising Institutional Money is Plan B 

• Expensive
• Time Consuming
• Path Uncertain
• Strings are attached 

2.       3 Keys to Raising Outside Money:  Management, Management, Management

• Business Plans are not unique, Management Teams are
• Highlight Teams’ work Together, if possible, and separately, if necessary
• Try to create a Team track record, even if different industry

3.       You are not Selling your Business, You are Raising Money

• Selling a business implies owners are taking money off the table and exiting the running of the business
• Raising Money is a natural part of the Investment Lifecycle

4.       MONEY:  How much do you need?  What do you need it for?  When do you need it?

• Remember, you are raising money
• You need a capital budget
• Do not ask for too little, but do not ask for too much

5.       You are Selling a Balance Sheet

• What are your business’ assets and liabilities
• Financial statements need not be audited, but they need to be GAAP
• Understand the effects of current and future indebtedness on your capital raise

6.       You are Making a Securities Offering

• Informal:  Disclose everything relevant for an investment decision…Everything
• Formal:  You need legal disclaimers
• Avoid puffery

7.       Get Help with the Terms of Your Offering

• Description of security
• Governance
• Board of directors
• Veto powers
• Transfer restrictions
• Sale of the company

8.       Tie Valuation to Security Offering

• Equity value is tied to exit at a higher valuation
• Debt rate and terms are tied to risk and company’s ability to repay

9.       Conduct Reverse Diligence on Your Company

• Intellectual Property:  All businesses have it
• Contracts:  When do your contracts expire?
• Corporate Diligence:  Have both stock and options been properly issued, transferred and terminated?

​
10.   What Role Do YOU Want?

• Governance
• Employment Agreement:  Terms are more than salary
• Non-compete
• Vesting on options