Acuity Advisors helped to secure venture capital funding for a UK-based team of product search experts
Here is how we achieved it…
PrismaStar are one of the leading product search companies in Europe. The Software as a Service (SaaS) specialists had enjoyed five years of strong success but wanted to further exploit its potential by launching a major sales and marketing drive. Acuity Advisors stepped in to successfully oversee and secure crucial venture capital funding on behalf of PrismaStar to help take it to greater commercial heights.
PrismaStar was set up in 2005 by a team of ambitious business experts who aimed to plug the deficiencies in the world of product search. The company has worked tirelessly to develop its patented guidance technology, helping consumers find the best products and services tailored to their individual needs. PrismaStar’s selector system works by mimicking the way the human mind makes decisions; it examines their needs and the choices available until the ideal compromise is reached.
PrismaStar’s unique and patented solution has been created to address the shortcomings of shopping on the web and the technology has already been adopted by a number of leading websites, including Vodafone, Mothercare and Jessops.
PrismaStar had found a solution to a real problem for online shoppers and its early success was encouraging. But it realised that it now needed to capitalise on that success. With its technology proven and early customers indicating that the business model worked, PrismaStar aimed to take the business to profitability. But this meant more sales effort and further funding, so PrismaStar’s current investors encouraged the management team to seek funding from institutions. This would provide more than capital; it would include contacts, networking expertise and executive oversight.
But PrismaStar faced two challenges in its quest to find the right type of investor.
• Securing investment quickly:
The PrismaStar team knew it needed to act quickly to capitalise on its early success. Time was of the essence and was a crucial factor. It wanted to have agreement for funding from an investor 12 weeks.
• Finding the right investor:
PrismaStar recognised it needed smart funding. It needed investors who could offer much more than just money.
“We entered 2010 with huge excitement knowing that we were on the cusp of something big. The consistent feedback we were getting from all our customer sites was very encouraging. Vodafone was a big win for us and built our confidence. However, we needed to capitalise on our success and take PrismaStar to the world – finishing off our technology, focusing on customer deployments and finally giving sales a huge marketing push,” said Joshua Tabin, PrismaStar CEO.
After several abortive attempts to secure venture capital funding themselves, the company realised it needed a corporate finance advisor on board with the technical know-how to oversee the process. The company needed experts who could get PrismaStar venture-ready and position the business well for funding. It also needed a team with a proactive “can do” approach.
“To entrust PrismaStar’s funding round to a corporate finance house was to put our future in their hands; without funding our company would falter. It was therefore one of the most important decisions I had to take and one that wasn’t taken lightly. I looked for a unique combination of skills and experience. Through a recommendation I met with Acuity in early 2010 and it was apparent from the first moment that they were exactly what we needed,” explained Tabin.
The approach to funding
Acuity’s experience and track record gave it a deep insight into the venture capital industry and it had solid experience in the technology sector. PrismaStar had already put together an IM (Information Memorandum) and had approached a handful of venture capitalists with little success. So Acuity focused on crafting an alternative IM, which portrayed the complex value proposition in digestible terms.
“It took a leap of faith to trust Acuity and their approach to marketing the business. Their IM was fundamentally different to the one I had produced and it proved to be exactly right. A number of the VCs I had previously approached took a fresh look at our business plan and for the first time were able to engage with our value proposition. This was largely down to the quality of the documentation Acuity produced,” said Tabin.
Acuity carefully pinpointed investors to approach in London and across Europe. These potential investors were screened before they were proactively approached. Acuity set up management meetings and gave PrismaStar a brief on how to handle themselves in the meetings. The PrismaStar management team were also coached to ensure the value proposition was clearly conveyed.
Tabin added: “I knew that raising finance would be demanding – particularly in a difficult economic environment. Acuity made this process as pain free as possible and the result they achieved within the timeframe significantly exceeded my expectations.”
Acuity secured four different offers for PrismaStar and coached the management team through the decision-making process. Acuity also negotiated the best possible terms and helped with recommending a legal team for due diligence. PrismaStar accepted funding from Octopus Ventures, which included a financial investment and a wealth of other professional experience. The term sheet was negotiated and signed within 11 weeks of starting the process.
Tabin commented: “My advice for any CEO looking to raise money is to use a corporate finance house. I started the process by myself and fell at the first hurdle. My only regret was not to have engaged Acuity earlier; they are specialists at what they do and will get better terms in a shorter timescale. Acuity proved to be the right choice for PrismaStar and I would have no hesitation in recommending them.”
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