“Money Ball” Financing:
Raise capital faster, with less effort, through a unique combination of
Big Data Analytics and Content Marketing Techniques
from Accelerant Partner, Quantum Growth Advisors
All healthtech CEOs share one ever-present concern: raising capital to move the company forward.
There are multiple great online sources that clearly describe how to move through the various levels of financing (i.e., https://fundsquire.ca/the-complete-guide-to-startup-scaleup-funding-in-canada/). BUT... what is seldom discussed is the PAIN and TIME involved in finally getting to a “yes”. Investors reject greater than 75% of presented deals -- There are just too many good opportunities.
ENTER DATA ANALYTICS, CONTENT MARKETING AND PROCESS AUTOMATION
As founder of Accelerant Health Innovations, I have been involved in raising over $50M for companies and over $230M for investment funds. I love building businesses, but have always found the capital raise incredibly inefficient - until now. Accelerant recently found and partnered with Shayan Somani, founder of Quantum Growth Advisors. The team at Quantum has created a unique, clever service that acts as an alternative to investment banking. Their managed fundraising process analyzes & filters millions of data points from all types of investors globally, and then uses focused content marketing techniques and campaign automation to target, connect with and close investors specifically interested in deals at your stage and in your industry. Below I review the strengths and weaknesses of conventional approaches, introduce you to the uniqueness of Quantum, and why I find it so effective. I think this will intrigue you!
Historically, companies raising post pre-seed money have been guided by well-intentioned agents or investment bankers who arranged hundreds of time-consuming presentations with anyone they knew who had money to invest. After all, you have a great product who wouldn’t want to invest and get equity and share in your success?
Financing agents are usually very good at three things:
Determining the best strategy and the best place to raise either debt or equity capital. Most companies don't have a clue as to how to do this, and a good investment banker can save them an enormous amount of time and money.
Preparing all the necessary documents to accurately present the value proposition for funding and to protect both the company and the investor from any misunderstandings. This requires more than just a business plan. Good investment banks also prepare something called a private placement memorandum--or PPM--which is a legal document designed to protect both sides from making a bad investment.
Ensuring that all government regulations have been followed in the raising of any capital. Typically, entrepreneurs raise capital in ways that violate CSA, SEC and NASD rules they didn't even know existed. Such ignorance could come back to bite them.
Where agents struggle is accessing a large pool of potential investors outside of their personal networks of institutional or accredited angel investors. Access to qualified, interested investors is critical to getting money when you need it.
Let’s look at the conventional scenario: You have a killer idea, great science, patents submitted, and are on the hunt for more financing. Your first $800K in angel investment and non-dilutive grants seemed like such a lot of money 15 months ago. You’ve hit your milestones, validated your technology, and started to get traction. You now need $2M ($5M, $10M?) to reach escape velocity.
You are introduced to an agent who has raised money for several other companies, and enthusiastically takes you on, perhaps on an exclusive basis. She or he has around 10 very legitimate investors who she has used in the past. But you learn over time that five of them are not really in your space but take your meeting as a favor to the agent (which eats your time). The investor meetings provide well-intentioned but conflicting suggestions on the presentation (“shorter”, “longer”, “more realistic”, “more blue sky”, “more narrow”, “more expansive”, etc.), but the changes are more indicative of their interests, rather than incrementally improving your pitch. Another 3 meetings are with investors who know the space, but are not currently active, but again take the meeting as a favor to the agent and recommend changes. The second last investor is frustratingly unavailable, and maybe the last one turns out to be interested in principle, but only if someone more senior will “be the lead”. Having come up dry from these 10, you find another agent, or agents and “lather, rinse, repeat”.
None of the above is likely new to you – in fact, most of you reading this are likely living it right now.
Let’s look at the Quantum approach, where deal analytics and “high tempo testing” provide serious economies of scale and time. Here are the key elements of the method, and their benefits to you:
● Global deal transaction analysis: Quantum purchased, scraped, mined and integrated all available metadata on every public and private investment transaction available, globally. Quantum searches all deals done by your competitors and comparators known in your space world-wide. They narrow down from an initial list of 1,000’s of investors, family offices and angels, to the top 500-1000 of highest relevance to your company. Every one of those entries identifies the investors, syndicates, deal size, dates, history of rounds, etc.
● Global investor contacts: for each identified investment firm, Quantum can access the deal leads, partners, LPs and decision makers on the team making those deals, get their emails and phone numbers, and look at all other deal activity in which they have been involved.
● Optimize your outreach content with real investors: Quantum performs instrumented “A/B testing” of outreach content by creating multiple versions of your teaser, outreach email, and intro decks, and tests them on a small batch of investors to see which ones get highest “open, dwell, contact and response” rates...including tracking spam filter traps. Thereafter, you can move forward confidently with your campaign at scale. This process has been empirically proven to drive investor engagement well above industry norms.
● Automate the campaign: Quantum then provides a fully automated platform that sequentially targets progressively attractive investors each week, tracking email open rates and follow-up, using analytics to gauge interest and automatically generate follow-on-emails requesting meetings under your name...creating a string of highly qualified potential investors.
● Optionally outsource the entire campaign, so you can focus on your business: You have a business to run, but as CEO, raising capital is your most important task. What if you could get the majority of the capital prospecting process outsourced to experts who will call you in just at the right time? Letting you run your business, in parallel with a highly effective capital engine.
Jim Buck, CEO of ClearCut Medical, is a veteran in the venture-backed medical device space and chose Quantum to do a multi-million dollar follow-on round to their initial $12M raised. In a recent testimonial, Jim describes Quantum’s “contemporary, clever process", getting his message out to a larger number and type of qualified investors, and getting the deal signed, without overwhelming a CEO focused on operational issues.
Accelerant specializes in helping early stage healthtech companies refine and validate their product market fit, business strategies and plotting a course to raise capital and get to market. Accelerant has partnered with Quantum Growth Advisor to provide Quantum’s deal analytics and pursuit platform for Accelerant’s clients. Over the last 2 years, Quantum has helped clients raise over $100M USD in 11 countries, for new companies generating $230M+ in revenue. Quantum targets clients who are growth-oriented and have a bold vision for the future. Our combined approach is to work as a specialized extension of your company rather than an external consulting firm.
If you are finding the weaknesses of the conventional approach all too familiar, and you are on a timeline to raise capital, you owe it to your shareholders, your future customers and yourself to explore the Accelerant/Quantum offering. You know the benefits of bringing disruptive technology to healthcare; why aren’t you bringing disruptive technologies to raising your capital?
Contact us and let us show you how.
© John Soloninka, Accelerant Health Innovations, 2020
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John Soloninka, PEng MBA, is the Founder and President of Accelerant Health Innovations, a consulting company focused on commercializing innovative health technologies. He has held multiple roles including medical technology and health system strategist, serial entrepreneur, former venture debt fund CEO and is the Founder and Co-Lead of the Society of Physician Entrepreneurs – Toronto Chapter. jsolonin@acceleranthealthinnovations.com; acceleranthealthinnovations.com
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