Early Stage Financing
Early Stage Financing
Many times companies have a new technology, idea or concept that is long in vision, and short on operational history. For companies at this stage, there is often a lack of professional financial support, leaving senior management to seek traditional financing solutions on their own.
Tunstall works with these companies to develop innovative strategies (operating and financing) that result in lower risk profiles to potential investors and less dilution to the companies.
Financial Services Software Company
The original operating model for the Company was to sell
a $500,000 installed software solution, resulting in a long sales cycle and wide variability in revenues. The Company was losing money and looking for an investor to help absorb some of its losses when it came to Tunstall.
Tunstall challenged management to develop a less risky sales alternative for its clients and transform the offering to an application service provider (ASP) model and charge a monthly fee for its use. In addition, Tunstall assisted in the $9 million acquisition of a competitor so that the Company would have the only solution in the market. Tunstall raised $20 million of equity financing for the acquisition and the implementation of the new operating model.
By converting to a service/fee based model, the Company immediately increased customer penetration, eliminated long sales cycles and created a steady, predictable earnings stream based on usage rather than relying on the original model. These factors increased the Company's attractiveness to financing sources.
Therapeutic Medical Product Provider
The Company had developed a new product offering, but needed additional production facilities and a distribution team to roll out the product.
Rather than build a new facility, Tunstall helped the Company identify an acquisition target with the infrastructure and international distribution capabilities the Company needed. Tunstall helped management secure $6 million of equity financing for the acquisition, which immediately resulted in dramatically increased sales and profitability. The Company filed for an IPO shortly thereafter, which provided additional capital to continue on its growth path.
By overlaying a new product or service on top of an existing business, operating infrastructure or technology, a company can immediately expedite its growth, reduce the perceived business risk, and sometimes eliminate a competitor.