At Alten Capital we connect with dozens of founders and entrepreneurs every month. Different organizations and individuals have distinct needs throughout the lifecycle of their businesses. We’ll share views on typical company needs, shareholder requirements, and deal alignment dynamics.
We believe businesses go through phases. Below are some potential example phases:
- Phase one can be when founders get together and find product-market fit (PMF) or service-market fit (SMF) and start to derive revenue.
- Phase two is when they bring external capital assistance to accelerate growth and take the company to the next level.
- Phase three is when they start to acquire other businesses and grow the company inorganically, requiring other types of capital partners.
- Phase four is when the company is of enough scale to combine with others, go public, etc.
There is no one right path for businesses; there are multiple ways to create value. Growth is typically a very effective value-creation lever, and aligning with partners to achieve growth goals is laudable.
Aligning the shareholders’ and company’s needs with the capital provider’s capabilities is important. If shareholders need liquidity, the transaction must include a secondary (“cash-out”) component. If the business needs cash to do M&A, a primary component (“cash-in”) may be relevant. Agreeing on governance and control provisions is key, regardless of whether it’s a majority or minority transaction.
At Alten Capital we invest in technology services businesses. Please reach out to explore potential partnerships.