Introduction- What Is SMASH:
SMASH, an award-winning mediatech startup for under-represented creative communities. Their mission is to harness the power of AI to pave commercial pathways for those often left at the sidelines of success. SMASH has secured government innovation grants, angel investors, and private equity. SMASH is on its way making noises among the content industry.
Navigating the competitive waters of the mediatech industry, SMASH has grappled with many challenges that startups often face. Crafting a technology strategy for business and financial planning for investor readiness is just the beginning.
The journey also involves getting money and building a team. This team focuses on creating a product that fits the market, which is not a simple task. They urgently needed someone who can help them bridge the gap between tech strategy and business goal. On top of that, we also were able to get them ready and boost their confidence for their next fundraising.
Goal: Gearing Up for Seed Funding
The project aimed to provide SMASH with the essential tools and knowledge needed to obtain seed funding. This funding would come from high net-worth individuals and institutions.
The founders of SMASH were new to the competitive world of technology business finance. They were embarking on their first formal investment round, which went beyond the familiar territory of contributions from friends and family.
The mission was twofold:
- To distill the founders’ extensive media expertise and the appealing mediatech vision, and roadmap into a compelling financial narrative;
- To translate the nuances of technology business economics into a robust financial model. As well as a cap table that would stand up to the scrutiny of savvy investors.
We wanted to be sure that SMASH was not just ready to raise capital. We also want them to feel confident in explaining their vision and value with investors in the future. SMASH had already secured initial funding through grants. However, they were now at a critical point, moving from grant-based funding to the more complex world of equity fundraising.
Background: Domain Experts Seeking Financial and Technical Acumen
SMASH’s entry into the complex world of technology business finance was similar to the challenges faced by other startups at this funding stage. Each step brought new obstacles and unexplored opportunities. The founders, Fiona Gillies and Christine Hartland, each had very strong media creative and innovation backgounds in their own right. Fiona, with her extensive experience in acting and producing, had established herself as a respected educator and thought leader. Christine is known for her hit productions, such as the gripping political drama ‘WMD’ and the suspenseful thriller ‘CONTAINMENT.’ These projects showcase her talent for creating captivating stories for the screen.
Both founders had impressive backgrounds in media. However, they found themselves in unfamiliar territory when it came to the financial aspects of running a technology business. They grappled with questions that went beyond their expertise in project budgeting. These questions delved into the complexities of modeling valuations and the intricacies of technology business growth.
When we first connected, they presented us with three fundamental questions. These questions highlighted their desire for knowledge and readiness for investment:
- Valuation: The critical question, “How much is our business worth?” was a major concern for the founders. They wanted to understand the principles behind determining this crucial figure.
- Financial Literacy: Both founders expressed an urgent need to understand the financial jargon and concepts that would inevitably come up in discussions with investors. They aimed to converse confidently in these situations.
- Deal Structuring: As the founders anticipated negotiations, they needed a deep understanding of their growth insights and the nuances of deal-making. This knowledge would allow them to navigate the give-and-take of investment discussions effectively. They wanted to understand how their own tech/product roadmap projected financial growth, so they could discuss it with confidence.
Approach and Strategy: From Merge Tech And Business Goal To Crafting Financial Narratives
SMASH was ready for a significant transformation. They were prepared to combine their creative goals with a solid commercial and financial strategy. Here’s the path we took with them, step by step.
- Merging Tech with Business Strategy: We began by working closely with SMASH to review the technology landscape. This involved making informed decisions about their product, selecting the right vendors, and building a strong team. It wasn’t just about making connections; we were there to create a strategic map for their journey.
- Balancing Bits and Budgets: We dove deep into the details of technology costs, breaking them down into clear, manageable pieces. This process helped SMASH understand the financial impact of their technological choices. It ensured that every decision made sense for their bottom line.
- Fostering Financial Finesse: Our focus then shifted to practical guidance. We guided the founders through the financial aspects of their business model. This prepared them for the types of questions investors might ask. Our goal was to provide them with the knowledge and confidence to discuss user acquisition costs and other financial metrics like experienced CFOs.
- Demystifying the Dollars: Finance can be complex and be isolated from technology and product features. In A&H, we made it accessible and helped founders connecting the dots. In our conversations, we decoded business valuation, essential metrics, and the importance of profitability and EBITDA for sustainable growth. Our coaching aimed at empowering the founders to engage in thorough discussions about their finances with any expert.
- Crafting Financial Narratives: The final step of the journey went beyond modeling finances. We combined the steps we took to make sense of the numbers. We listened to the stories the founders wanted to pitch to the investors.
Then, we ensured that Fiona and Christine could envision their company’s future through the financial forecasts. We helped them understand not only the ‘what’ but also the ‘why’ behind the numbers. This approach allowed them to respond to investor inquiries with insight, supported by solid financial statements.
Outcomes: Successfully Raised Seed Also Building Strong Connection With Investors
Tangible Triumphs:
- Seed Capital Success: Together, we bridge the gap between technology and financial structuring, leading to SMASH raising a round of SEIS capital. The founders hit their raise target, a testament to a well-crafted investment case.
- Strategic Financial Structures: Recognizing the need for a short-term financial bridge, we introduced the convertible note concept to the founders. This strategic move not only covered immediate product development costs but also set the stage for a valuation spike for further funding rounds.
- Preparing for the Next Chapter: With seed funding and convertible note secured, SMASH is now poised for raising EIS capital, armed with a clearer direction and a stronger foundation for future negotiations.
Intangible Insights:
- Mastery of Pitching The Vision Narrative: One of the most remarkable transformations we’ve observed is the founders’ increased confidence when discussing their venture. They now have a newfound understanding that connects the dots between technology and finance.
This knowledge allows them to navigate investor meetings with a strong command of their business narrative. It’s not just about knowing the numbers; it’s about telling a comprehensive story. In this story, their product vision and technological innovation are seamlessly integrated with their financial strategy. - From Financial Intimidation to Conversational Command: Our discussions and workshops have transformed financial intimidation into financial fluency for the founders. They now possess the insight to navigate initial investor inquiries and the acumen to park deeper financial questions for later discussions.
- Building Stronger Connection With Future Investors: This newfound confidence has ripple effects beyond individual meetings. It enhances their ability to connect with tech teams, investors, and stakeholders, fostering relationships built on mutual respect and understanding.
Last But Not Least, Our Journey With SMASH:
- Collaborative Crafting: The journey began with an intensive period of working closely with SMASH’s team. We aimed to understand their technology and product goals to build a financial model and cap table. This wasn’t a detached exercise but a collaborative effort. It distilled the essence of their business into a practical and powerful financial tool.
- Simplifying Complexity: We focused on creating a near-cash model that captured the heart of their business. This approach allowed us to bypass unnecessary accounting complexities in favor of clarity, direction, and growth potential. The resulting model spoke in the language of possibilities rather than just ledgers.
As SMASH continues to grow and succeed, we at A&H Consulting remain dedicated to supporting founders with our expertise and knowledge. We help them navigate the entrepreneurial seas with confidence.
Whether it’s clarifying the nuances of financial metrics or aligning technology strategy with business goals, our collaborative approach is designed to turn visions into reality.
Schedule a 15-minute discovery call with us today! Let’s embark on this journey together and craft your success story.
