The typical process to raise capital by most financial advisors who work with established growing companies is to charge an upfront retainer of $25,000 (or more), and then earn compensation upon funding (called a ‘success fee.’) Success fees can vary significantly but often range between 2% and 10% of the capital raised. While bankers rationalize it is ‘success based’ the process to raise capital can be very expensive easily costing $500,000 or much more for the company seeking the financing. Even more important, this approach can lead to other drawbacks or conflicts that can work against the best interests of the client.
These conflicts to raise capital can include: fee structures that pay much more for raising equity than debt, receiving equity ownership in a client based on the valuation of the investment, long (typically 2 year) ‘lock up’ or exclusivity periods, and the acceptance of finder’s fees from the funding institutions. (For more information, see our related White Paper: “Investment Banking Fees Examined.”) Taken collectively, these common practices should make clients wonder whether the financing opportunities presented by the success based advisor are really best for the client or the broker.
Lantern Capital Advisors succeeds in quickly finding appropriate growth capital financing solutions that limit ownership dilution for our clients. We use a proven methodology in order to source capital and negotiate financing terms that satisfy both our clients and financial institutions. There is no one out there that does what we do, that is as successful as we are at raising capital for our clients, or that can raise capital for less. Over half of Lantern's growth capital raising engagements involve financing amounts over $10 million. We take no equity or warrant positions in our clients.
Lantern Capital Advisors raises both debt and equity on behalf of our clients. Our ultimate objective is to ensure that our clients don’t give up control of their business to outside investors in order to support growth. We help our clients transform their business to high growth enterprises with high multiple valuations. We are repeatedly selected by our clients to work for them again, because they trust that our insight and value for raising capital, and corporate financial planning differentiate us from our competition.
- Strong Relationships
- Repeat Clients
- Deal Negotiation
- Hourly Based Vs. Broker or Investment Banking Formula for raising capital
Lantern Capital Advisors is a corporate financial consulting firm that uses our own process to raise capital that differs significantly from investment bankers and capital brokers in two key ways:
1) We raise capital strictly on an hourly, fee-only basis.
Rather than seeking large success fees to raise capital, and to be fair to our clients of all sizes, we choose to work on a simple, hourly, fee-only basis. As consultants, this removes any economic incentive to recommend one financing solution or provider over another. We also use reasonable consultant billing rates that are comparable to working with an outsource CFO or middle market CPA or law firm. This simple approach drastically reduces the cost to clients to raise capital, and removes all conflicts of interest or potential for ‘self dealing.’
2) To achieve consistent results, we work in 3 phases in order to raise capital for our clients.