Case Study: Venture Capital investment in E-Commerce Start-Up

BACKGROUND
In late March 2016 EFM were approached by a UK based venture capital group. The VC had made a six figure start up investment in an E-Commerce business in 2015 with an agreed first stage financing level and timescale to launch online trading.

Finance Director
THE CHALLENGE
By March 2016 it had become clear that progress was not on track for launch and that costs were going to rise. Short on financial reporting and controls, the VC was reluctant to progress their investment without a clear financial picture of the future.

EFM’s APPROACH
My first task therefore was to prepare a fully integrated business model – including a profit and loss statement, cash-flow forecasting and a balance sheet, which modelled the business going forward, based on the current cost position for the investor.

OUTCOMES
Now with improved visibility and greater level of confidence in the numbers, the investor was prepared to commission a technical review on future requirements, to ensure a successful launch for the business. This technical review produced a requirement for significant additional website costs and indicated a delay in launch timescales. I duly revised the financial model to include the revised costs and the rescheduled timescales for income receipts.

Shortly thereafter the VC’s investment committee met and approved the stage two financing arrangements. In addition, I have produced a drawdown schedule to assist the investor in predicting actual cash requirements month by month.

GOING FORWARD
The CEO and founder of the E-Commerce business is more than satisfied with my input to date and we have agreed that in future I will monitor the situation on a monthly basis and supply additional input to support the business as required, as they approach launch and commence active trading and ongoing business operations.

Case Study: Neil Simpson