Last week I had breakfast with a founder-CEO who had been through the wringer. After spending years building a successful services business, she got squeezed out and screwed by an unscrupulous business partner. Not one to stay down, she picked herself up and started a new firm, only to be diagnosed with cancer. But she kept on fighting. She beat cancer, and she’s built her business up to healthy profitability and growth.
She’s been turning down acquisition offers because she wants to *build* not flip. But she’s capital constrained, and that led to our conversation. As experienced as she was, she didn’t know a ton about raising money because she’s always built profitable businesses. Oh sure, she knew all about venture capital, because who works in tech without becoming aware of VC? They get all the press, and have all the sex appeal. But venture capital is designed for moonshot product companies, not successful services firms. She knew that route would be a waste of time.
What I wish *I* had known back when I was running a 100-person consulting company was how many options exist outside of the VC route.
There are revenue-based financing options like Lighter Capital and Grenville. For companies a little more product-oriented, there are mixed equity and profit sharing options like Indie.vc. And if you are a middle-market, profitable services firm, especially if you have recurring revenues of any kind, there are a surprising number of investors (private equity firms, family offices, independent sponsors) who might love to work with you and take a minority or controlling stake, while letting you continue to run the business.
Right now on Axial, there are 273 investors actively looking for companies like the one run by the CEO I was speaking with. Andrew Sachs (screenshot below) is just one of them.
Now this CEO knows how to build a business. She can sell, hire and operate like gangbusters, but she’s never raised money. She hasn’t yet fully examined her options and choices for debt versus equity. But she knew that her lack of growth capital was holding her back.
When it comes to raising money, there’s only so much book-learning you can do, you just need to get into the market. And if there’s one thing that middle-market CEOs lack, it is time. A CEO needs to discover relevant options quickly and efficiently. That’s where our platform (and our events) come in. Our platform isn’t perfect yet, but it’s miles better than shooting in the dark.
It’s for CEOs like her that I came to Axial. It’s what keeps me driven and focused because I know that we have a chance to truly help her achieve her goals, change her business, and ultimately change her life. What we’re trying to build isn’t easy to pull off, but it’s worth fighting for.