Archives: Investment Flow

Investment flow and process.

Capital Needs of Business

Growth equity is a great way to accelerate a business. We love to work with teams who have done the work to understand the capital they actually need to meet corporate objectives. Over-capitalization may be in-vogue at times, but we believe there’s a better case for matching actual capital needs with the right-sized growth equity financing. We’d be happy to help you walk through the math as well.

Round Size and Valuation

Not all businesses require $50-$100 million to meet their growth capital needs – sometimes, smaller is actually better. Madison Bay is focused on businesses were $10-$25 million of new equity is the sweet spot – unlocking growth and driving higher enterprise value. We also find it’s also much easier to talk about valuation when dilution is balanced, both sides are rational, and the math makes sense.

Investment Flow 5

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New Investor Dynamics

Madison Bay is a value-added, minority investor. We enjoy working alongside other investors versus pushing them out of the room. During due diligence, we spend the time to understand the dynamics of the current investor group in hopes of determining how to best support the collective effort.

Existing Shareholder Perspectives

Madison Bay is a collaborative, late-stage investor. We work closely with existing shareholders to understand perspectives around the past, the current and the future goals for the business. Our experience complements the heavy lifting done by earlier stage investors and teams, and our goal is to partner and truly accelerate the business after our investment.

Passage of Time

The need for investor and employee liquidity is often exacerbated by the passage of time. Working hard for 4-7 years can be a great journey, but often shareholders require liquidity along the path from start-up to industry leader status. In select cases, Madison Bay works with existing shareholders to address their liquidity needs. Our secondary equity practice is focused on improving shareholder alignment and enabling the Management Team to focus on creating a more valuable enterprise.