The Art of Arranging Capital For Emerging Businesses

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The Art of Arranging Capital For Emerging Businesses
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2021 ushers in the very beginnings of what will come to be known in history as the “Post-COVID Economy.” Much like the Post-World War II Economy and the Post-Depression Economy, businesses will restructure, some will go under, and new disruptors will be born.

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An October 2020 Forbes article states, “New York based startup investor, Jack Einhorn, shared that when markets are being disrupted, like the current forced acceleration of all things digital, many opportunities are created, and now is one of the most prolific times in history for spawning new ways of doing things.”

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Arranging Capital For Your Business

With so many political and societal shifts happening, businesses can’t afford to shoot from the hip when pursuing the acquisition of capital. That’s where a rare breed of specialized consultants comes into play.

According to Solomon RC Ali, CEO of Solomon RC Ali Corporation, which has helped businesses successfully raise more than $250 Million in structured investment capital, “It all starts with the initial consultation. If we elect to work with a business that is looking to raise capital we educate that business on what lenders and investors look for, and why. We then do our due diligence and market research and we package that business. Lastly, we tap into our vast pool of investors and lenders to make strategic, streamlined introductions that can result in arranging capital for these businesses.”

According to Solomon, too many businesses fail to raise capital due to their failure to see things from the investor or lender’s perspective. “Most pre-funded businesses have very little education in how the money end of things works. They come to a pitch meeting with a dream or a small business with no capital, and they believe that their idea or business is worth more than the investor’s money is worth.”

He goes on to explain that many business owners dig their heels in and want to keep the lion’s share of the business, and they balk at giving up equity. What they fail to consider, he says, is the investor or bank’s point of view. “You are essentially asking an investor or banker to risk their money, and you’re are not willing to offer any significant collateral or equity in exchange for this risk.”

The Value Of Your Equity Stake

Continues Solomon, “I always explain to businesses that if they currently own 100% of a business that is worth $1 Million, that is not nearly as profitable as owning 30% of a company with a $100 Million Dollar valuation, which is where we aim to bring these companies. Now your 30% equity stake is worth $30 Million.”

Solomon RC Ali Corporation has created a unique niche within the industry of raising capital. Rather than an accelerator or broker, the company acts as a consultant, educating businesses on the process of arranging capital, doing due diligence, packaging the business to present to investors and bankers and ultimately, arranging capital for businesses.

“We get an equity stake, convertible note, or a combination thereof for all deals we help to facilitate, and the goal is usually to bring these companies public,” concludes Solomon RC Ali. “Our decades of relationships with a large pool of investors give our clients the best possible chance at raising capital, building out infrastructure, scaling, gaining market share and ultimately selling or going public.”

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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