Raising venture capital for a startup is not an easy task, however, Jay Jung shares a case study that details the problems involved and the steps taken to ensure successful funding on a non-tech, mid west company seeking investment funding.
Embarc Advisors successfully advised a Client Company, located in the Midwest, with their first external fundraise of $10 million.
The Client Company faced numerous challenges in positioning their story and attracting attention from top investors.
As an industrial company, the client faced difficulty in positioning its story
As a Midwest based company, it was difficult to access top VCs, who are primarily located in the Bar Area or New York
The founders were strong in product development and sales but had limited experience in finance or capital raising
Embarc guided the founders through the entire process from preparation to a successful finish with immense attention to every detail.
The details included:
- Creating a financial model
- Scripting initial outreach
- Preparing a professional data room
- Negotiating term sheets
Access the case study, Raising VC Capital For A Non-Tech, Mid-West Company, on embarcadvisors.com
Jay Jung shares a case study that explains how his company helped a client with their fundraising process, and increased their valuation by 80% and doubled the capital raise.
One of our clients received a term sheet from a well-known VC in the industry. Our client was very excited as getting an investment from this firm was a strong sense of validation in the industry. However, the valuation was significantly lower than what they were hoping for.
The client only had one term sheet from this specific investor and was in dire need of a cash infusion to maintain its fast growth trajectory. Discussions with other investors were lagging and unclear if they were seriously interested.
This is a weak hand. In traditional negotiation terminology – what is your BATNA (Best Alternative To a Negotiated Agreement)? Ours was perhaps none existent, at best weak. But as Adam Grant advocates, “The science of the deal reveals that great negotiators refuse to believe in a win-lose world. They care about both results and relationships. They don’t declare victory until all parties win”
If you focus just on valuation, you are not going to gain much in this situation. We refuted their approach to valuation and explained why it was too low (unreasonable). The VC did not push back on our logic, but that doesn’t mean they accepted our higher valuation.
The key to gaining something in this type of discussion is identifying other issues that the investor is solving for. For investors, it is very rarely just about valuation.
Read the full case study, Successfully Negotiating VC Termsheets, on the Embarc Advisors’ website.
Umbrex is pleased to welcome Jay Jung with Embarc Advisors. Jay Jung was an Engagement Manager in McKinsey’s Hong Kong office where he was part of the Corporate Finance practice. His prior experience includes investment banking at Goldman Sachs New York and San Francisco offices, where he was a Vice President and completed ~$50 billion M&A and capital market in transactions. He also started his own technology startup, which raised funding from Softbank and other VCs.
In 2018, Jay started a consulting firm focused on helping startups and small medium size business in their fundraising, strategic finance, growth and M&A. He also works with private equity and venture capital firms in supporting investment due diligence, financial modeling and presentations. Jay lives in San Francisco, California. Jay is happy to collaborate on projects involving complex financial modeling, capital raise or M&A.