Focus

How to finance the growth of your company?

Companies need money to grow. Very few companies can finance their growth from operational profits, or from the funds allocated at the start. Borrowing capital from banks can be complicated for many reasons: too high risk profile, lack of sufficient collateral, or absence of historically proven recurring revenue.

Venture capital rounds provide this essential help to young ang growing businesses. After exploring the nearest circles of ‘friends, family and fools’, most startups go on the path of the ’seed’, ‘series A, B, and C’ financing.

Every company is unique

There can be different markets, different opportunities, and different business ideas. And most certainly, there are different people. Every company is unique, and so are their financial needs, capacity and ambitions. Haerlem Capital offers various models to help FinTech, SaaS and IT companies to achieve their growth plans.

A good business plan is half of the success. The other half is in your data room. The narrative, no matter how great and convincing it is, comes on top. And, from this starting point on, it is all about the “how”, “which” and “when”:

How much liquidity and therefore financing you need to execute your plans.
Which kind of financing source and model are right for you.
When you need the money and when it is going to come back.

Financing types

Haerlem Capital offers three models of financing your growth:

Business loan
Revenue-based financing
Growth capital

The table below compares these three models

 
Business loan
Revenue-based financing
Growth capital

Type of investment

Borrowed capital

Borrowed capital

Equity capital

Time in business requirement

1-2 years

2+ years

0+ years

Revenue / cashflow requirement

€ 100,000 per year

€ 100,000 per year

Depending on sector

Collateral requirement

Balance sheet plus personal surety and guarantees

Balance sheet plus personal commitment

Personal commitment

Investment amount

Based on balance sheet

40% of recurring revenue

€ 250,000 – € 2,500,000

Management attention in execution

Low

Medium

Medium-high

Costs and repayment

5-10% interest, small commission. Fixed repayment schedule.

Percentage of revenue, small commission. Flexible schedule.

Value of shares sold, initial transaction costs of up to 10% of investment.

Investment terms

1-4 years

1-5 years

2-10 years

Time-to-funding

4-6 weeks

4-6 weeks

2-6 months

Our approach

The screening phase

Contact us, and we will perform quick initial assessment of whether there is a match between Haerlem Capital and your company. If there is a mutual fit, we will together proceed with the next phase. Usually, this phase takes 1-2 weeks of the lead time.

Evaluation

Depending on your ambition, liquidity demand, business plan and the present position of your business, we will determine which financing model (or their combination) would be most suitable for your needs. Then, working closely together, we will examine your business and will learn each other better. We will need to understand both your business plan and the current capability, capacity and potential of your company. If there is a positive outcome, this phase ends with a memorandum of understanding (MOU), which is a non-binding agreement on high-level key points of potential co-operation. Depending on the type of financing, this phase takes 2-4 weeks.

Engagement

After the MOU is accepted by our investment committee (whose approval is required), we will begin the due diligence process and will work together on a business plan / forecast for the next 12 to 24 months. Once all terms have been agreed and provisionally accepted, we will prepare the formal participation agreement. After signing it, our partnership begins. For simple business loans or for revenue-based financing, this process is standardized and can be concluded within 2-3 weeks. For the growth capital engagement, this process can take 4 weeks or longer, based on the complexity of the business and its shareholding structures.

Execution

Here, we follow the agreed business plan. Depending on the engagement model and as defined in our co-operation agreement, Haerlem Capital can help you to access our business network, facilitate company transformations, productize your service offerings, or enter strategic partnerships. We aim to help you to grow your business and secure and grow our investment.