Today, many start-ups seek to develop their business, whether on the domestic market or internationally, through fundraising. They open their capital to investors or institutions capable of providing them with the necessary funding for their development, in exchange for a share of the capital of the company. Other means of obtaining funding can also be considered for start-ups and SMEs, such as a financial backing to a bigger company, which allows the company concerned to benefit from the image and human, industrial and financial means of another firm, which will also take a share in the capital. Negotiation with banking institutions or specialized organizations is also possible during a search for financing.
In any case, regardless of the strategy of the company, its phase of development and the person to convince, the request for financing must be solidly substantiated. Indeed, an investor agreeing to support an innovative company takes a major risk: losing all or part of his contribution if the project is not viable or overrated.
Negotiation therefore necessarily involves determining a fair and objective value for the company. We talk about financial valuation, and this is an essential preliminary step in any search for funding .
Financial valuation as an argument/support for a funding request
What are the elements an investor looks at to make a choice during a fundraising campaign? How do they determine the value of the company? Can they expect to resell their shares in a few years with a profit? Is the financial risk high? Are the figures presented coherent with the project?
During these negotiations, the entrepreneur must be able to justify the value of his company and its development perspectives. Not knowing them or submitting a weak business plan will deter investors. On the other hand, having a solid and objective report, produced by an external expert, is a decisive element in your approach.
If your project is supported by a coherent business model and a business plan, your interlocutors will be convinced of its viability and of your professionalism. You will be able to convince them to accompany you in your development.
Carrying out a financial valuation study of your company before approaching partners will also allow you to better negotiate the amounts and levels of participation. Knowing the objective value of your company and what its potential is gives you the best arguments during a negotiation.
Find out more about Brandon Valorisation:
For more than 30 years, Brandon Valorisation has helped SMEs, start-ups and other project leaders in the definition of their development strategy based on the valorization of intellectual property: financial valuation studies, search for licensees, industrial backing, financial modeling of business plan… In partnership with Brandon IP, industrial property attorneys, the firm offers a wide range of services dedicated to the protection and defense of your innovations and the valuation of your intangible assets and of your company.
With its long experience with entrepreneurs, Brandon Valorisation has developed a method of financial valuation of intellectual property rights that adapts to the specific needs of each of our clients.
To find out more about our financial valuation studies, go to the following page: www.brandon-valorisation.com/en/prestation/financial-valuation/
And more specifically, consult our dedicated pages:
The Brandon Group, a unique offer that combines industrial property and the financial and economic valuation of your intangible assets and of your company.
