We raise capital for innovative and high-growth businesses seeking to raise between £1m and £25m in debt or equity to fulfil growth ambitions and paths to profitability. In this article, we explore our methodology for gaining confidence in our ability to raise capital for a potential client, before taking on a mandate and explore the strategic significance of soft sounding and investor outreach on live transactions in building lasting relationships with potential investors.
Understanding Our Criteria: A Prerequisite for Success
Our journey towards securing capital for our clients begins with a stringent set of criteria. We exclusively partner with businesses demonstrating at least £1m in annual revenue and displaying a 20% in annual revenue growth. Our sweet spot is clients seeking to raise a minimum of £1m in capital, be it through debt or equity. The focus extends to equity fundraising, specifically at series A or later funding rounds.
Strategic Soft Sounding: A Precursor to Partnership
Before committing to a new client, we employ a proactive strategy known as soft sounding. This involves reaching out to approximately 10 potential investors on a no-names basis. The selection process is rigorous, with a focus on investors with track records of investments in the same industry, lifecycle stage and geography as our prospective client. Additionally, our preference leans towards investors with available "dry powder" — uninvested funds ready to be deployed.
The Power of Consistent Engagement
Soft sounding is not a one-time affair but a consistent practice integrated into our year-round operations. By maintaining an ongoing dialogue with potential investors, we stay abreast of their evolving preferences and investment appetites. This proactive engagement allows us to cultivate relationships with a diverse array of alternative investors who can be tapped into at any given time.
Live Mandated Transactions: Amplifying Investor Outreach
Simultaneously, our engagement strategy extends to live mandated transactions where we actively reach out to 20-40 investors per transaction. Through this dual approach we are not only in constant touch with our existing network but are continually expanding and diversifying it. By doing so, we maximise our chances of finding the right investor match for each client, enhancing our ability to secure capital.
Building Lasting Relationships: The Cornerstone of Confidence
Confidence in our ability to raise capital stems from the establishment of lasting relationships with investors. Soft sounding acts as the precursor to these relationships, providing us with valuable insights into investor preferences and positioning us favourably when formal mandates are initiated. This strategic approach not only instils confidence in our clients but positions us as a trusted intermediary in the capital-raising process.
In conclusion, our success in raising capital for high-growth businesses lies in the synergy of strategic soft sounding and consistent investor outreach in tandem with the thorough due diligence we conduct during the investor readiness phase of our work with clients who have formally engaged us, by way of strategi business reviews and scrutiny of the assumptions underlying clients’ financial projections. Through maintaining ongoing engagement, thorough investor readiness phases of work and prioritising relationship-building, we navigate the capital landscape with confidence, ensuring value added outcomes for both our clients and investors alike.
Q&A
Q: What is debt?
A: Debt refers to the amount of money borrowed by an individual, company, or government from another entity. It is typically repaid with interest over a specified period.
Q: What is equity?
A: Equity represents ownership in an asset or company. It can be in the form of stocks for publicly traded companies or ownership stakes for private businesses.
Q: Who is an alternative investor?
A: An alternative investor is an individual or institution that invests in assets beyond traditional stocks and bonds. This can include investments in real estate, hedge funds, private equity, and other non-traditional investment vehicles.
Q: What are uninvested funds?
A: Uninvested funds, also known as cash reserves, are funds held by an investor or organization that have not yet been deployed into investments. These funds are often kept liquid for future investment opportunities.
Q: What is a private credit fund?
A: A private credit fund is a type of investment fund that provides loans or credit to private companies. Investors in these funds aim to earn returns through interest payments and capital appreciation from the debt investments.
Q: What is a corporate VC arm?
A: A corporate venture capital (VC) arm is a subsidiary of a larger corporation that functions as a venture capital firm. It invests in startups or emerging companies that align with the parent company's strategic goals.
Q: What is a VC firm?
A: A VC firm, or venture capital firm, is an investment firm that provides financial support to startups and small businesses with high growth potential in exchange for equity. VC firms often play a crucial role in the early stages of a company's development.
Q: What is a family office?
A: A family office is a private wealth management advisory firm that serves high-net-worth individuals or families. It helps manage and grow their wealth by offering services such as investment management, estate planning, and philanthropy.
Enquiries
For further information, please contact info@langdoncap.com
About Langdon Capital
Langdon Capital assists innovative, high-growth companies, with >£1m in annual revenue and >20% in annual revenue growth, raise between £1m and £25m in debt or equity at Series A or beyond from a network of 700+ alternative investors spanning venture capital funds, venture debt funds, corporate VC arms, private credit funds, real estate funds and family offices.
contact info@langdoncap.com | visit www.langdoncap.com/capital-raising
About the author
Sabbir Rahman is Managing Director of Langdon Capital. He has held prior roles with Morgan Stanley, Lazard and Barclays Investment Bank. He has executed over £60 billion in notional value of debt, equity, M&A and derivatives transactions with global corporates, private equity funds and financial sponsor groups.
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This is not financial advice or any offer, invitation or inducement to sell or provide financial products or services or to engage in any form of investment activity.
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