Capital Raising

When a business seeks investors to fund its ventures, it is typically referred to as raising capital or seeking investment funding. More specifically, the process can involve various forms of financing depending on the stage of the business and the type of funding sought. Active investors are those that commit capital but are also actively involved in the business. They make decisions on strategy, senior management, and more. Examples include venture capitalists and private equity firms

At CGV, we help businesses in Africa to have access to business funds. We have a global network of fund sources that can fund almost any project. We collaborate with major global finance institutions that supports businesses and projects across Africa. From, startups, mid-size and large businesses, we champion the raising of capital across several industries.

• Preparation: getting your business project investor ready.
• Raising Capital

Assessing Capital Needs

• Determine Funding Requirements: Estimate how much capital is needed and for what purpose (expansion, product development, working capital, etc.).
• Identify the Type of Capital: Decide whether you need equity, debt, or a hybrid of both based on your business needs and structure.

Preparing Business Plan and Financial Projections

• Develop a Solid Business Plan: A comprehensive business plan outlines your company’s goals, market opportunity, business model, competitive landscape, and growth strategies.
• Create Financial Projections: Prepare detailed financial statements and projections (income statement, balance sheet, and cash flow projections) for at least the next 3-5 years.

Decide on the Type of Investors

• Equity or Debt: Depending on your goals, choose the appropriate type of investors—angel investors, venture capitalists, private equity, banks, crowdfunding platforms, or strategic investors.
• Match Investors with Your Stage: Early-stage startups typically approach angel investors or venture capitalists, while more mature businesses may seek private equity or institutional investors.

Prepare Your Pitch Deck and Marketing Materials

• Create a Pitch Deck: Prepare a concise presentation (10-15 slides) summarizing your business model, market opportunity, growth potential, and how you plan to use the raised funds.
• Develop a Term Sheet: For equity raises, outline the terms of the deal including valuation, percentage of equity offered, and investor rights.
• Craft a Compelling Narrative: Develop a clear and compelling story about why your business is a great investment opportunity.

Approach Potential Investors

• Investor Outreach: Reaching out to our associates (investors, angel funds, VC's and family offices.), make introductions, or schedule meetings with investors. A warm introduction through a mutual connection increases your chances of getting attention.

Conduct Due Diligence

• Investor Due Diligence: Investors will want to evaluate your business thoroughly. Be prepared to provide legal, financial, and operational documents, including financial statements, intellectual property rights, contracts, and corporate structure.
• Background Check on Investors: Ensure the investors are a good fit by conducting your own due diligence on their track record and experience.

Negotiate Terms

• Valuation and Ownership: Negotiate the company's valuation and how much ownership equity investors will receive in exchange for their capital.
• Deal Structure: Finalize the terms around control, board seats, liquidation preferences, and exit strategies.
• Legal Agreements: Have legal counsel draft and review necessary agreements like the term sheet, shareholder agreements, and other relevant documents.

Close the Deal

• Sign Agreements: Finalize and sign all legal documents, ensuring both parties are aligned on the deal structure, rights, and obligations.
• Receive Funds: Once agreements are signed, funds are transferred from the investor to your business account.

• Equity Funding
• Debt Funding
• Crowdfunding
• Trade Finance
• Government Grants & Loans

Involves selling shares of the company to private investors or firms. The business offers ownership shares (equity) to investors in exchange for capital. Its includes

• Private Equity: Involves selling shares of the company to private investors or firms.
• Venture Capital: Targeted at startups and early-stage companies with high growth potential. Startups and early-stage companies may seek investment from venture capitalists, who provide funding in exchange for equity, often for high-growth potential businesses.
• Angel Investment: Wealthy individuals who provide capital in exchange for ownership equity or convertible debt. Wealthy individuals (angel investors) invest in startups or early-stage businesses in exchange for ownership equity or convertible debt.

The business borrows money and agrees to repay it with interest, usually through loans or issuing bonds. It includes

The business raises small amounts of money from a large number of people, usually through online platforms.

• Reward-Based: Platforms like Kickstarter where backers receive a product or service in return for their investment.
• Equity Crowdfunding: Investors receive equity in the company through various platforms

Trade Finance represents the financial instruments and products that are used by companies to facilitate international trade and commerce. It makes it possible and easier for importers and exporters to transact business through trade and reduces the risk associated with global trade by reconciling the divergent needs of an exporter and importer.

• LC
• SBLC

• Small Business Loans: Government-backed loans with favourable terms.
• Grant: Non-repayable funds provided by government agencies for specific purposes

Project finance is a method of financing large, capital-intensive projects where the debt and equity used to finance the project are paid back from the cash flow generated by the project itself, rather than from the general balance sheet of the project’s sponsors. This type of financing is typically used for infrastructure, energy, mining, and other large-scale projects like power plants, highways, oil and gas pipelines, or large-scale renewable energy developments. that require substantial investment and have long-term revenue generation prospects. Project finance relies on the project's assets, contracts, and cash flows, and involves limited or non-recourse financing, meaning lenders have limited claims against the project sponsors if the project fails.

Project Conceptualization

• Identify the Project: Define the scope, objectives, and feasibility of the project (e.g., a new power plant, toll road, or renewable energy facility).
• Feasibility Study: Conduct technical, legal, environmental, and market studies to assess the project's viability and risks.

Project Sponsors and Structure

• Sponsors: Identify the project sponsors who will initiate the project, provide equity capital, and oversee project development. Sponsors could be private companies, governments, or joint ventures.
• Special Purpose Vehicle (SPV): Set up an SPV, a legal entity created solely for the project, to isolate the project’s financial risk from the sponsors.

Risk Identification and Allocation

• Risk Assessment: Identify the key risks associated with the project, such as construction delays, regulatory risks, political risks, and market risks.
• Risk Mitigation and Allocation: Allocate risks to the parties best able to manage them (e.g., contractors handle construction risk, while off-take agreements manage market risk). Various financial instruments like insurance, guarantees, and hedging may be used to mitigate risks.

Legal and Regulatory Approvals

• Compliance: Obtain the necessary permits, licenses, and regulatory approvals from local, national, or international authorities.
• Contract Negotiation: Key contracts must be negotiated, including:
  • Off-Take Agreements: Contracts with buyers of the project’s output (e.g., power purchase agreements).
  • Construction Contracts: Ensure project completion on time and within budget.
  • Supply Contracts: Secure the raw materials or inputs necessary for the project's operation.