Through interfacing with the owners of seed and early stage businesses over his 25 year career, NBI's president Carl Johnson has seen the inside of hundreds of businesses, business models and business ideas from a variety of industries. While every industry varies, there are common issues that every business faces as it grows. NBI enables its clients to leverage this experience when making strategic planning decisions.
NBI's clients have ranged from business concepts to companies with sales in excess of $10 million in annual sales. Strategic planning engagements often result in deliverables such as:
As more is learned about your business and idea, NBI can leverage its referral base to make introductions to financing sources, strategic partners, first customers and executive hires. See Introductory Services below.
- Executive Summary
- Narrative Business plan
- Financial Projection model
- Investor Presentation
- Executive Summary
- Financing Strategy
NBI assists clients in securing the most appropriate type of financing for their business given their stage of development, risk factors and market conditions. NBI clients have successfully secured financing through grants, SBA loans, vendor credit, commercial debt, government loans, subordinated debt, private equity and venture capital. NBI will work with you to determine your optimal capital raising strategy and in the development of the materials necessary to achieve that success (executive summary, business plan, financial projections, investor presentation).
Click here for examples of financing without selling equity
Click here for more information on the financing process.
Over the years, NBI has developed an extensive network of contacts from assisting seed and early stage companies. As a client of NBI, a company can benefit from introductions to NBI's network of:
- Value-added financing sources
- Strategic partners and customers
- Government resources
- Service providers
As NBI learns the objectives of your business, it can refer you to additional contacts that can add significant value to your business.
For example, undercapitalized early stage businesses and inexperienced entrepreneurs can benefit from the creation of an advisory board that can add valuable experience, insight and increase the perceived value to the business. The valuation of (and the chances of success) of pre-revenue businesses has been shown to be much higher when a startup has a management team as opposed to just the founder. Financing sources are typically attracted to opportunities that have customers or at least strategic partners capable of creating customers.
NBI has made introductions on behalf of clients over the years – even instances where the founder hired the person introduced to be their CEO.
NBI seeks to leverage its existing relationships to provide added value for its clients.
EXAMPLES OF OBTAINING FINANCING WITHOUT SELLING EQUITY
- NBI helped a startup professional services firm finance its spin-off entirely with long term debt at a below prime interest rate and no spousal guarantees. The partners retained all the equity in the business and the loan was paid off early.
- NBI helped a startup manufacturer finance its entire $800,000+ startup through a combination of grants, loans, economic development incentives, purchase order financing, working capital financing and supplier credit. The entrepreneur retained 100% of the equity in the business.
- NBI helped a client to finance an expansion by negotiating a package which includes the acquisition of a 5,000 square foot, build-to-suit building with nearly $1 million in state grants, tax credits and other incentives as well as additional local below-market financing and incentives.
- NBI, acting in a subcontractor role, assisted another service provider in helping its client receive $900,000 in grant financing. The entrepreneur retained 100% of the equity in the business.
- NBI assisted a client in developing a financing package used to secure over $1 million in vendor credit and bank financing to finance growth in lieu of selling equity.
While these are great examples of receiving financing without giving up equity, they are the exception more often than the rule. Most financing sources will require equity compensation for putting capital at-risk and most commission-based service providers have little interest in reducing their commissions by seeking alternative financing sources for clients. NBI will seek to help you to identify the least expensive financing option that is achievable.
If you will need to raise equity, there are ways to reduce the amount of dilution you incur. One important way is to increase the valuation of your business by increasing and improving your management team, recruiting seasoned board or advisory board members, attracting strategic partners and first customers and finding value-added financing sources. NBI has built a referral network over the past 25 years that it can leverage on behalf of its clients.
In 2012, Carl Johnson, in partnership with Synergy Systems, Inc., will be launching Invigorated Ventures, LLC, an entity that will sublicense Synergy’s GlobalWorx platform in exchange for a royalty or equity position in early stage and startup companies. This offering is expected to be far less dilutive to select seed stage companies than traditional seed stage financing sources. See the Invigorated Ventures tab for more information.
FINANCING ACQUISITION PROCESS
For some reason entrepreneurs are expected to use a lawyer for legal issues, an accountant for accounting issues but - when it comes to attracting financing, they are expected to be omnipotent. There is a process to raising financing successfully that can increase the likelihood for a successful raise. NBI can provide the following services:
Capital Raising Strategy
Venture capital is not always the best solution to a company's capital needs nor is it accessible to the 99%+ who apply. An appropriate financing strategy should be based on a business owner’s personal objectives, the cost in time and money of that financing and the likelihood of being able to close on that financing. NBI can help you assess the most appropriate financing strategy for your company and its best estimate on the likelihood of success.
The process of developing a plan is often more valuable the end product as it forces you to consider all aspects of your business. In some instances you may be able to raise financing without a business plan but you will not get your best valuation without one. Institutional investors who receive hundreds of plans a year will require a professional plan to even get past their analysts. NBI will help you develop a fundable plan in a format that a potential financing source will expect and that addresses their funding criteria. The plan will also include projected financial statements created with justifiable assumptions.
Initial Investor Communications
Your initial communication to a potential financing source is not likely to be your business plan. It will be a cover letter, executive summary, a voice mail you leave or your "elevator speech" at a business event. These initial communication tools are often overlooked yet have the ability to make a lasting good or bad first impression. NBI will advise you on how to create awareness and interest in preparing these initial communications.
It is unlikely that financing sources will change their criteria to fit your deal. Therefore, it is imperative that appropriate financing sources are targeted. NBI can help you identify an initial pool of candidates, determine if their profile, portfolio, fund life cycle, desired deal size and other criteria fit your deal, and help you manage the time consuming communication process with minimal disruption to you and your staff. In many instances, the early identification of a “slow no” provides great savings in time and effort.
You will likely have several opportunities to make your pitch to a potential financing source: your executive summary, business plan, your first qualifying phone call, your initial presentation and the committee presentation. It is unlikely you will get a second chance if you do not execute any one of these properly. NBI Advisors will help you prepare your various pitches and critique them from objective perspective to ensure you are prepared each step of the process.
"Done Deals" can become undone during the due diligence stage. Non-standard financial reporting practices, poor intellectual property management, unreported liabilities, mismanaged pipeline forecasting, - there are a myriad of red flags that can kill a deal prior to closing. NBI Advisors knows these types of red flags and can advise you on corrective action before the start of the due diligence stage. NBI Advisors will work with your lawyers, accountants, auditors (if any), analysts, and others to enable you to successfully complete the due diligence stage without any last minute, deal-killing surprises.
The closing of a large investment requires timely management of high priced lawyers, accountants, analysts and others following a tightly controlled critical path to ensure a cost effective closing and a process that does not lag and leave you open to unforeseen negative events. NBI Advisors can advise you during this process by developing a critical path to closing that will ensure that all necessary activities are executed in a priority order that will lead to a timely and successful close.
Little consideration is often given to the post-closing planning requirements of receiving financing. It is possible that you will convert to a different corporate entity creating personal tax consequences. It is likely that you will have to appoint one or more directors to your newly formed Board and Committees. You will have to develop new policies and procedures to comply with your new agreement. NBI can help you anticipate and plan for these and other time consuming issues so that you can focus on executing your business plan