General Guidelines

Your firm is in the market to raise capital. You selected an investment banker to represent you in the process. The firm’s vision, financial goals, strategy and performance have been documented for the investors to review. An information library, stocked with materials such as a flip book, financial statements, standard forms and contracts, company policies and procedures, and a financial model is available to potential capital providers upon signing an NDA. The preparation of these materials took weeks or perhaps months. Your banker sorted through his/her contact list of investors making dozens even hundreds of preliminary investor calls. This resulted in a short-list of potentials that want to setup a conference call with your company’s top management.

Initial investor call

At this point, the many weeks and months of work are finally paying off. Surely, the investor will recognize the opportunity of marketplace lending/fintech and want to invest, right? Maybe, but remember the process is only getting started. Often company managers become hasty thinking all the preliminary work means a deal is close to consummation. For this reason, I always remind the client that the initial investor call is not to discuss the terms a deal. One should introduce themselves and the company, provide substance to certain key metrics and outline the firm’s overall strategy. Yet, I continually witness clients outline terms or discuss valuation too early in the conversation. This may make an investor feel pressured, suggest price shopping or even worse make your company appear desperate during the call. For an investor’s point-of-view, this suddenly appears like a low-probability transaction. That pushes them away from your opportunity in favor of others.