EXCLUSIVE: Insiders On Capital Raising And Scaling: '2021 Was A Year Of Champagned Valuations While In 2023 We Are Dealing With The Hangover'

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Benzinga Fintech Deal Day & Awardsfeatured thediscussion Insiders on Capital Raising and Scaling: Strategies, Tips, and Examples withpanelists includingSocial Leverage General PartnerMatt Ober, FT Partners Managing Director Amar Mehtaand BMO Managing Director Corey B. Davis. Quasar Markets CEO Steven Orr moderated the discussion.

Capital Raising: Inflation and interest ratesmade current times challenging to raise capital. In knowing what startups should do to raise capital, Ober believedit wasimportant for company founders to realize the 10-year journey of their companyand its valuations, and not look at only the current scenario.

It was also crucialto know how the company wouldacquire users and how to remain cash-positive.

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Mehta sawthe path to profitability, proven economicsand how acompany couldmake investors comfortable as important factors for raising capital. Also, if the additional capital raise was reasonable enough for three to fiveyears without needing more capital in the near term.

Davis said,2021 was a year of champagned valuations while in 2023 we are dealingwith the hangover.

He added that, If you want to raise capital, let go of 20 times revenue multiple, it is better to look at dilution.

It was important to focus on whether a companyhadthe right product, he said,and if it hadthe features an investor could be attracted to buy the company.Davisadded that 2024 should be a good year for M&A deals.Loading… Loading… Loading…

Leadership Qualities:Highlighting a few qualities for leaders to run an early-stage company were:domain experience, someone who understands technical, the adversity that it had gone through to sustain its future existenceand numbers to back what the capital was required for.

With regard to investment in AI-driven companies, it was important to find the right AI company that coulddevelop the right product using the right techniques. Is AI cutting costs,making processes more efficientand whatother metrics aresome of the important questions for investing in these companies?

Mehta saidthe financial inclusion sector and emerging markets were the two areas where AI still hadsignificant scope for monetization and development.

For the next round of money to be raised, it was important to look at KPIs and how well they hadbeen achieved. For later-stage companies, it could benotedthe company achieved a certain million dollars in revenue or wasthere a product to merge with a bigger company?

Also, diligence was getting equally stringent with changing times for all-stage companies to raise capital.

Ober said that it wasn'tabout how money was spent to attract users, it was about attracting users in a unique way which was how you couldcreate content to drive user growth and the best productfor an investor to jump in.

Industry Experts Final Opinion for Capital Raising/Scaling: Mehta:What next does the investor have in store to offer to you in terms of expertise or product expansion? Ober:Valuations hold a significantly important place. Davis: Get things done correctly first and then look at the next step.

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