A fast growth start-up going through rounds of funding to scale their business
A start-up client secured an exclusive license for a proven business idea from the US patent holder. The founders jointly raised a first round of seed funding, supplemented by asset finance in order to establish their first UK based plant.
They had a scalable business model but soon realised that they hadn’t sought enough funding to support their growth ambitions.
Significant capital would be needed to shift their core customer base to more profitable multinational customers. To meet higher product demand they would need to invest in additional sites and equipment that would enable them to increase capacity quickly. The business was also in the process of expanding into Europe from the UK.
The CEO didn’t want to compromise his control over running the business or dilute the founders’ equity stakes substantially. Any funding decision also needed to secure the business’s obligations to existing investors. After exploring all options, it was agreed that funding through the Enterprise Investment Scheme (EIS) was the most appropriate route. An application was made and funding obtained.
Following the first successful EIS round, the business faced a new challenge related to the spiralling cost of sourcing raw materials from outside the UK. If these costs could not be significantly reduced, the viability of the business would be at risk.
It became evident that the only solution was to produce the raw materials in house – for which a further UK patent would be required as well as new plant. To support this expansion, the workforce would need to be increased - all of which would require further funding.
1. Forecasting and financial modelling
Developed more robust forecasting and financial models in order to gain a reliable view of the business’s financial position and subsequently the level of funding needed to achieve key growth milestones.
2. Review of funding options
Discussed the options available taking into consideration the business’s growth ambitions alongside existing commitments from previous funding rounds.
3. Business valuation
Ensuring that the current valuation was realistic and would support their funding application.
4. Meeting requirements for funding
Support with restructuring company shares, advising on European expansion, obtaining tax clearances from HM Revenue and Customs to ensure obligations to original investors were not compromised, and providing advice on strengthening their pitch for funding.
Two successful rounds of EIS funding achieved, valued at approx. £4m
We supported in the recruitment of an in-house Financial Controller to assist the CEO with the day-to-day running of the business.
We continue to work closely with the CEO and Financial Controller to troubleshoot issues that arise particularly in relation to business structure, tax position, working capital position and the development of the workforce to support future growth ambitions.
"Finding the right source of funding can make or break the future of your company"
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