A sustainable business is concerned about the social, environmental, and economic impacts associated with its current and future operations and the ability of the business to meet present needs while ensuring its and others’ long-term survival.

We believe the UN’s sustainable development goals best represent the areas that need attention globally, although Colton Alexander works primarily with businesses in water, food, energy, and waste.

You should be continually planning, positioning yourself, and networking to prepare for future fundraises. Luckily many activities that you should focus on to make yourself more attractive to an investor are the same things that will help make your company attractive to customers. Companies that use us for full-service preparation and capital raising services typically engage us 8 – 10 months before their preferred closing date. We also offer bespoke services that can help strengthen your position at any point.

In a typical 8-month engagement, we spend the first two months researching and planning. We create a marketing strategy, build an investor database, and connect with our distribution network to “preview your deal.” We market your deal in months 3 and 4. This is when you can expect to have conference calls with interested parties. In months 5 and 6, we typically have early negotiations and letters of intent. In months 7 and 8, there will be due diligence, deeper negotiations, and closing.

We have found three things that make a significant impact on funding readiness. First, all messaging and materials should be clear and concise. Investors have very little time and do not want to study your materials to understand what you do and what problem you solve. Second, no matter what stage your company is in, you should have something that shows customer validation. If you are pre-revenue, you should talk to prospective customers and conduct market research to show support for your business. Finally, be transparent. The team supporting you and prospective investors should know the risks associated with your company. It is always best to be upfront about all aspects of your company that way we can work to mitigate risks. It is also essential to create a relationship based on trust with potential investors, and withholding information makes that impossible. 

The time needed depends on how quickly you can provide all needed information to us as part of our due diligence review and drafting process. For straightforward bridge financings such as convertible notes where we know the client well, those can usually be completed in as little as a few weeks. For more complicated financings such as preferred stock capital raises, those typically require at least a month, particularly where a private placement memorandum needs to be drafted (although private placement memoranda are less commonly used these days).

Colton Alexander does not invest directly in its clients as an investment banking firm. Instead, we represent the client by marketing their business to many parties to get the best price and terms available from the marketplace. Colton Alexander has separate business operations whereby private investments are made through a private investment company but these entities are distinctly separate and follow all regulations and processes to maintain such separation.

Under United States securities laws, and the securities laws of each individual state (or “blue sky” laws), offers and sales of securities have to be registered or exempt from registration. Generally, registered offerings are too cost prohibitive for startup companies. This means a startup needs to issue securities under an exemption from registration. The most widely available and used exemptions depend or mostly on limiting the offering to only “accredited” investors, but not every entrepreneur has a rich aunt or uncle in the family who qualifies as an accredited investor. Some exemptions permit offering to non-accredited investors, but depend on those investors still being “sophisticated.” An investor can qualify as a non-accredited but “sophisticated” investor if the investor, either alone or with a “purchaser representative,” (as defined by the SEC) has enough knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment. While your mother and best friend, and second cousin may be brilliant and may even run their own businesses, they may lack the sophistication the SEC requires to meet exemption requirements. Determining whether to include non-accredited investors, whether sophisticated or not, in the offering at the outset is important because it will affect which exemptions from registration are available for the offering and on what basis.

No. As a company, Colton Alexander does not provide tax advisory services or legal counsel. But, for every client and every project, Colton Alexander often assembles the team roles needed for the transaction at hand and has a large network of trusted tax, legal, and other sspecialized professionals to support client needs.

It is always best to sell a business when you want to do so rather than when you have to. That means you go to market when you and the company are fully prepared. In a perfect scenario, you may time your exit to match the solid performance of your business with peak selling cycles in the private capital markets. The earlier you start the planning process, the more control you will have over this decision.

Yes, but it is probably not in your best interest. While you are an expert at running your company, you probably are not as knowledgeable about the M&A process. Selling a company is time consuming and very emotional. This business most likely represents your life’s work. You have an emotional attachment. If you normally use terms such as earn out, working capital gate, hurdle rate, and mezzanine, it is probably a good idea to call and discuss your situation with a competent intermediary. You do not want to make a mistake and leave a chunk of your hard-earned nest egg on the table at closing.

There are many methods and metrics to determine the value to your company. Sometimes we use many simultaneously. Tax value, Estate Value, Enterprise Value, Discounted Cash Flow, Multiples of EBITDA, etc. all are valid ways to tell what a company may be worth. But, the real question is to whom does the value matter, and in what context? The number your CPA gives you might be appropriate for tax planning purposes, but it does not reflect the possible selling price for your company. In an M&A scenario, the acquirer determines value. An M&A advisor, like Colton Alexander, will use various methods to help you understand how the market will appreciate your company and what that market may be willing to pay you for it.