DIDN’T GET FUNDED? DON’T KNOW WHY?

So, your Lender or Venture Capitalist didn’t write you a check?  These are some of the most disappointing moments we face in trying to strengthen a business.  And since confident forward motion is required of an executive team, it is crushing to face the lack of funding and all those disappointments, such as cutting employees, stretching the garage phase, etc..  The haunting question of “Why” begs a concise and detailed answer.  The full analysis must be done, if successful funding is to become the life blood of the development for the early stage company.  Below is a short list of possible things that can and often do go wrong. 

REASONS FOR FAILED FUNDING EFFORTS

• Misguided Assessment of Risk
• Poorly timed capital infusion planning
• Lack of Creative Solutions for Funding Options
• No Large Market for the Product, and Poor Penetration Possibilities
• Costly Due Diligence Steps not taken
• Market Presentation and Value Proposition poorly done
• Technological holes
• Poor Management Team Structure
• Lack of Proper Skill Set
• Unrealistic cost projections and overly demanding valuations
• Absence of Strategic Partnerships and Alliances
• Poor or Completely Wrong Revenue Model for the Industry
• No Proper Legal or Shareholder Structure or Organization
• No concept of Branding or efforts required
• Substandard Representation and Poor Communicators
• Negative, Awkward or Undereducated Personalities in Point Positions
• Wrong selection of Target Investors and Strategic Partner Entities
• No profitable and realistic exit strategy
• Lack of documentation of transaction-related legal documents, including credit agreement, indenture, and purchase/sale agreements

There are many reasons to be considered, but the above short list represents some of the most important ones.  As experienced fund managers having had responsibility for large funds deployment, Glisson Capital team members have first hand knowledge of the challenges inherent in the funding cycle.  Investors many times don’t know how much risk is in their portfolio, and many entrepreneurs either unrealistically assess risk exposure or don’t know how to quantify it at all.  Any lender or investor will get a knot in the pit of their stomach when evaluating a proposal and trying to decide to cut a check.  The responsibilities to the shareholders and management teams members are great.  Consequently, the reasons for making the investment must overwhelming persuasive and documented precisely.

Investment banking requires a skill set that combines both art and science.  It is a fluid skill that we must constantly keep abreast of new aspects of the value model. Economics of the deal, the rich institutional considerations that are essential on Wall Street are not well documented.  In addition, a good fund manager must reply upon internal gut instincts to motivate action.  Quality relationships shore up those crucial decisions, when the dollars have been laid on the line.

Glisson Capital managers are experts in Investment Banking Valuation, focusing on the primary methodologies used on Wall Street to determine valuation for public and private companies on a standalone basis, as well as within the context of transactions, restructurings, and the investment decision making process. Drawing upon their own transaction experience, as well as their broad network of professorial and professional sources, Glisson successfully bridge the gap between finance theory and practical application.

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