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Are you considering hiring a corporate venture capital consultant? We believe your answer should be, “Yes.”
If you are representing a startup company, new corporation, or require seed money, you may indeed need a venture capital consultant. But if, like many others, you aren’t sure of the role such a consultant would play, we’ve outlined the advantages here.
In short, venture capital consultants make it their goal to help a business find venture capital investors for a startup or seed money funding. This article examines the advantages of hiring a corporate venture capital consultant and explains how you can benefit from doing so.
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What Does a Corporate Venture Capital Consultant Do?
A corporate venture capital consultant is typically a highly experienced investment banker who obviously has deep and wide venture capital experience. The consultant specializes in seeking capital investment from angel investors, venture capital funds, venture debt funds, or private equity sources. They might also approach a family office investor, sometimes referred to as a “high-net-worth investor,” for investment funding.
Firms that specialize in corporate venture capital consulting advise and assist clients in startups by making improvements across the board. Such improvements maximize the opportunity for venture capitalist funding. They could also result in management changes, product development, services analysis, or financial analysis, as a corporate venture capital consultant might suggest.
The process of corporate venture capital consulting is one that thoroughly details each potential advantage and capability of a company under consideration. Basically, the process for most venture capital consultants is similar to the following:
1. A Corporate Venture Capital Consultant Coaches the CEO, Executive Staff, and Legal Counsel
The consultant coaches the executive team to prepare each individual for the presentation and the interviews to come. This is because raising venture capital funds is not an easy process. As such, everyone involved must be thoroughly prepared. Legal counsel crafts term sheets and documentation, and the venture capital consulting firm draws up a list of potential investors.
2. They Complete the Company’s Financial Analysis
Many startups have little to no financial accuracy in the early months of their incorporation. Therefore, the consultant completes a financial analysis and fills in the blanks. A full reorganization of the financials may also be in order, depending on the extent of difficulty in using the prior financial records.
3. They Prepare Business and Finance Models
The consultant, in tandem with the company’s management team prepares a complete overview of the company for the upcoming presentations. This will include such items as a business plan, legal entity status, historical business transactions, and a full financial picture. For example, a venture capital consultant would examine a national chain of bookkeeping services by thoroughly reviewing the bookkeeping business plan. In this manner, the consultant would determine the viability of a capital funding request.
Key performance indicators, analysis of investor returns, and investor term sheets are included. Therefore, the financial portion of the process is undoubtedly the most important piece 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.
4. A Corporate Venture Capital Consultant Collects and Prepares All Other Materials
With the wealth of data, analysis, modeling, and prospecting collected, the sorting and cataloging of documents begins. Moreover, this continues throughout the venture capital process. Digital materials are compiled and stored using venture capital software tools that support this process. The software tools include:
- 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.
- Industry-sector breakdown. For example, this includes 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.
5. They Introduce Prospects to the Company
At this juncture, the role of the corporate venture capital consultant is critical in the outcome. In particular, an experienced consultant will bring every available prospect to the table, presenting to the company the prospects with the highest likelihood of investing.
This allows an examination and collective decision regarding the targeted venture capital firms. Then, after a list of prospects is prepared, campaigns are scheduled to approach venture capital firms and secure initial appointments.
6. They Further Coach Management Through the Process
The management of the company must now be coached and included as the process continues. On-site presentations or visits may occur. Additionally, changes in staffing, purchasing, and other areas of operations may begin.
7. The Venture Capital Consultant Closes the Deal and Conducts the Post-Deal Evaluation
As the funding nears completion, the corporate venture capital consultant oversees all the detailed documentation, transfer of funds, and final investor inquiries. Finally, the consultant negotiates any remaining issues at hand with executives or management of the company.
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Are you considering a corporate venture capital consultant? After you have reviewed here the numerous and complex aspects of the venture capital process, we suspect that your answer is undoubtedly a resounding, “Yes.”
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