£10M exit for a SAAS start-up


Background:

Malcolm Holloway was introduced by a Venture Capital Fund who were about to put their second round of funding into a SAAS start-up company, but concerns were growing around the company’s financial reporting. I got to meet the team and provide advisory services, which enabled me to attend the monthly board meetings.

Challenges:

There was an initial lack of financial control and visibility over cash and cash burn. Due to the struggle with funding and discussions around the overall survival of the start-up, there was an atmosphere of mistrust between the original investors and the company founder. There was no appointed finance specialist or individual with basic financial knowledge within the business. The founder of the company was very autocratic and made important decisions without consulting or informing his colleagues.

It was very difficult to instigate any measurements due to the founders controlling management style, so sadly none were put in place. We reported financials against the budget and previous year’s financials and presented them to the board. A detailed business plan was prepared to help raise funds, but this was soon dismissed by the founder who immediately put the plan in the cupboard. Our two main KPI’s were to maintain sound financial rigour within a struggling start-up business and to also keep the investor relationship strong and alive.

Solutions:

After initiating an improved reporting and planning system to improve the start-up’s cash stream, Malcolm became the trusted advisor to the client. He attended on-site meetings regularly and became part of the team and was even invited to social occasions like the office Christmas party. What started off as a frosty relationship between Malcolm and the founder, who felt this arrangement had been forced upon him by his investors, grew into being well-respected as always acting in the companies interest. By engaging the founder in a timely manner, Malcolm was able to establish the importance and value of financial rigour and advice, resulting in a much more open relationship and better sharing of plans.

Our approach:

To instigate basic financial controls and construct a suitable reporting and planning platform over time with the founder, which was a struggle as he did not see the value in them. This strategy took the founder down a journey, rather than trying to force the new approach upon him. When he started to see the new method showing improvements, he quickly understood that taking advice could be beneficial.

Benefits:

With the right financial control and reporting in place, this helped to assist in rebuilding the communication and relationship between the investors and company founder, which led to more funding being provided. This gave the start-up enhanced credibility when it came to seeking debt finance. The founder’s journey came to a successful end when he achieved a smooth exit out of the business.

From starting with mounting debt to ending with a £10 million sale.

It’s safe to say that without the strategic financial reporting and improved controls put in place, the company would have struggled to raise the necessary funding required for an effective growth and achievable exit. Malcolm was rewarded with a bonus and a repeat client that he still operates with to this day.

Share this page: