The situation: The company was established 3 years before we came. At that time, the company was in a challenging situation with a severe cash shortage to keep it running. They were working with a potential investor who promised to invest in the company, took some steps to find out much information about the company, and sent them a term sheet. We found out that the term sheet contained many unfavorable terms and conditions for the company. Furthermore, as we discussed more with the company, we understood that the investor might want to make a hostile takeover. As a result, we helped them decide to withdraw from working with the potential investor.
What we did has helped the company tremendously. We helped them keep their company going and have the opportunity to raise capital to keep the business running at a limited level while looking for other sources of funding to get back to normal operations and expand further.
What we’ve done:
- Product navigation: The company has a platform with many features serving many types of businesses. We helped them identify their target market and focus on a few features relevant to their market segment which is chain companies.
- Revenue model assessment: before we came, the revenue from Point of Sale (POS) subscriptions accounted for 65% of total revenue. We worked with them on:
– Identifying potential new revenue streams from existing business
– Exploring partnership opportunities: define other platforms to integrate for fee sharing.
- Potential investor and lender identification and capital raising assistance:
– Assist in making a business plan for raising funds
– Finding potential funding sources
– Assisting the company through the entire fundraising process
The result: After our work, their subscription revenue was reduced to 30% of the total revenue, while other revenue streams from selling related products and fee sharing with other platforms were more profitable.
We were successful in raising funds from individual investors to help them maintain their normal business and have a good start on the next steps to raise more funds from institutional investors. Two years after we came and after funding from individual investors, their company value increased by 20 times.