Does Lellco deliver my investors?

Quite rightly this is going to be a crucial question of every new client seeking our services, so it needs a frank response.

No, we don’t, not directly and mostly because we no longer provide direct SME advisory services so that we are not competing with the many good advisers that also utilise AuSMEquity and Self Managed VC Funds for their clients.

However, if you have been talking to other service providers that tell you they have a list of investors all keen to invest into your offering, good luck.  In that instance please know that once you have been through that exercise we would welcome you back to have a more pragmatic chat about your offering.

If you haven’t already worked it out, 95% of equity offers require a lot of hard work, determination, and patience in order to succeed.  It currently takes on average 9 months to complete a successful equity funding round and 12 months for an unsuccessful one, in collaboration with other advisory firms we are looking to change that scenario.

Of all equity funding offers as many as half will never get funding, or will get much less than they seek and in terms much different to what they offered.

A percentage of equity offers just don’t stack up, and will never stack up and should never get funded, at least not in their current form. But many more could and should be funded but aren’t, simply because they have not done the hard work of the 3 Ps, proper prior preparation.  That is why Lellco wants to save everyone considerable time, money and effort before getting too far into the process by doing a Success Probability Assessment.

Can’t Be Done (for very long)

It is our experience that no firm can truthfully represent that it has a list of investors ready to invest into your project unless:

1. Yours is one of the first projects they have ever done, in which case they are inexperienced and you will be paying for their tuition; or
2. They are lying just to get your business.

What happens is that someone with a network of possible investors will fall into SME capital raising by tapping into that network.  Great result.  But by the third time they try to tap into that network it is tapped out.  Perhaps the well has run dry, perhaps nerves are building, or friendships feeling used and strained, or possibly some weaknesses in earlier deals are starting to be revealled or worse.

There is a structural problem with expecting your service provider to also feed you the investors, fiduciary relationships.  It is the same argument that perplexes the regulation of the financial planning, finance broking and real estate industries.  If I am engaged by you to prepare your equity offer then clearly my legal obligation is to you.  How then do we manage the best long-term relationship with investors and simultaneously also manage the offers of our other current SME equity clients?

One of the things you truly need from a service provider is honesty, and honestly what you need most is structure and guidance.

What is done (for the long-term)

The best advisory firms have developed a sustainable means of promoting clients to a network of potential investors.  This means they have a list of potential investors that are interested to consider new clients they are working with, but that is never a guarantee they will become your investors because there are just too many considerations.

That is why all good advisory firms need to keep refreshing their potential investor lists and networks and that is almost as difficult for them as it is for investment offerors.

AuSMEquity is our tool to assist all the stakeholders.  It is low-cost, very simple to use, and open to all users.  We can and do work with any existing or new platform that might be attractive to investors, such as:

• investor platforms;

• venture capital firms (both national and international);

• Angel Investor networks.

What We Do with Investors

At Lellco experience has taught us that the most important things we can do to get investors to consider your offering is:

1. Be honest with them, because the moment we assist someone to be dishonest with an offering we lose all credibility with investors;
2. Facilitate discussions with the offeror;
3. Make the process as simple as possible; and
4. Get out of the way.

That is why our services are process driven with all stakeholder needs in mind.

Investment Platforms

Just as clients are different so too are the benefits of platforms.  There are now some excellent platforms that we do recommend, but you and your advisers need to consider which of those matching and promotional platforms are most suited to your offering.

AuSMEquity is not an investment platform as it does not match investors to investees.

Tax Incentive Benefits

A distinct advantage we do offer our clients, on behalf of their potential investors, is assessment of the tax incentivised investment benefits of their offering.   We now offer full pre-qualification as a tax exempt investment and full SMVCF Certification, giving the Issuer marketing advantage over their competition and strengthening the investment proposition.

Venture Capital Manager

Another Lellco advantage is our relationship to the venture capital manager Purpose Driven Capital.

Purpose Driven Capital manages venture capital funds and Lellco operates as a feeder into those funds by administering the Self Managed VC Fund service aned directing the best of currently available SME equity offers.

However, Self Managed VC Funds are only a small component of SME Equity funding and we still work in compliment with many other venture capital managers.