Do you need a corporate venture capital consultant? If you are representing a startup company, new corporation, or require seed money, you need a corporate venture capital consultant. If, like many others, you aren’t sure of the role such a consultant would play, we’ve outlined the responsibilities as follows: corporate venture capital consultants are companies that make it their goal to help a business find venture capital investors for a startup or seed money funding. This article examines the elements of the role corporate venture capital consultants play and how you can benefit from it.
A corporate venture capital consultant is typically a highly-experienced investment banker with deep and wide venture capital experience. The consultant specializes in seeking capital investment from the following sources: angel investors, venture capital funds, venture debt funds, or private equity sources. A family office investor, also referred to as a “high-net worth investor,” may also be approached for investment funding.
Firms that specialize in corporate venture capital consulting advise and assist clients in startups with improvements across the board to maximize the opportunity for venture capitalist funding. Such improvements might occur in management changes, product development, services analysis or financial analysis.
The process of corporate venture capital consulting is one that thoroughly details each potential advantage and capability of a company under consideration. The process for most is similar to the following:
- Coaching of CEO, executive staff, and legal counsel: The executive team is coached to prepare each individual for the presentation and interviews to come. Raising venture capital funds is not an easy process; as such, it must be thoroughly prepared. Legal counsel crafts term sheets and documentation and a list of potential investors is made by the corporate venture capital consulting firm.
- Financial Analysis is Completed: Many startups have little to no financial accuracy in the earlier months of the corporation; therefore, a financial analysis is completed to fill in the blanks. A full reorganization of the financials may be in order, depending on the extent of difficulty in using the prior financial records.
- Business and Finance Models are Prepared: A complete overview of the company will include such items as a business plan, legal entity status, historical business transactions, and a full financial picture. For example, a national chain of bookkeeping services would be examined by thoroughly reviewing the bookkeeping business plan to determine the viability of a capital funding request. Key performance indicators, analysis of investor returns, and investor term sheets are included. The financial portion of the process is undoubtedly the most impactive in this process. A corporate venture capital consultant will be able to provide an overarching perspective and a deep history of experience in supporting this part of the venture capitalization efforts.
- Collecting and Preparing Materials: With the wealth of data, analysis, modeling and prospecting collected, the sorting and cataloging of documents begins and continues throughout the venture capital process. Digital materials are compiled and stored using venture capital software tools that support this process. An overview of the software tools includes:
- High-level research of portfolio companies
- Reports indicating the level of capital available in each portfolio company
- Expected returns of each portfolio company
- Investment risk for each portfolio company
- Filter portfolio companies to determine additional funding needs
- Industry-sector breakdown: revenue, directors or founders, investment history, corporate ties or relationships
- Stock market history, current performance and current price
- Management of corporate models, including partnerships
- Resource materials and templates, such as files, charts, and models
- Prospecting: At this juncture, the role of the corporate venture capital consultant is critical in the outcome. An experienced consultant will bring every available prospect to the table, presenting the prospects with the highest likelihood of investing through to the least likelihood of investing. This allows an examination and collective decision regarding the targeted venture capital firms. After a list of prospects is prepared, campaigns are prepared to approach venture capital firms and secure initial appointments.
- Preparing Management: The executive board, CEO and legal counsel were coached in the first step of this process; however, the management of the company must also be coached and included as the process continues. On-site presentations or visits may occur and changes in staffing, purchasing and other areas of operations may begin.
- Closing and Post-Deal Evaluation: As the funding is near completion, the venture capital consultant oversees all the detailed documentation, transfer of funds, final investor inquiries, and negotiates any remaining issues at hand with executives or management of the company.
Do you need a corporate venture capital consultant? After reviewing the numerous aspects of the venture capital process that can be presented, managed and finalized successfully for all parties concerned, it would seem that the answer is already in place. We wish you the best of success!