Idea
Investable bio-businesses, for whom?
A company is ready for a specific capital. Each funder has its own thesis, its own ticket and its own proof, and preparing in general makes the search longer.
Readiness is always readiness for a specific capital, with its own thesis and its own questions. I have worked on all 5 rungs.
Knowing which rung the company is on saves months of conversations with the wrong funder.
Read how to prepare a bio-business for investmentThe capital ladder
- 01Seed capitalSeedIts thesis: Bets on a team and a real problem before there are stable sales.What the company proves: A problem validated with customers, a team able to execute and a use-of-funds plan with milestones.
- 02Working capitalWorking capitalIts thesis: Finances the cycle between buying from producers and getting paid by the customer. It is repaid by the same sale.What the company proves: Purchase orders or contracts, a known cash cycle and a repayment track record.
- 03DebtDebtIts thesis: Lends over a term against predictable cash flow, at a fixed return.What the company proves: Positive or near-positive cash flow, known unit margins and reasonable collateral.
- 04Blended financeBlended capitalIts thesis: Combines philanthropic, concessional and commercial capital so that each takes the risk it can bear.What the company proves: Measurable impact, a first-loss tranche and a path for commercial capital.
- 05Fund equityEquityIts thesis: Buys a stake in the company because it expects it to be worth several times more.What the company proves: Unit economics that improve with scale, corporate governance, clean due diligence and a credible exit.
Ideas
Other ideas
- The bridgeCapital is abundant in Latin America. What is scarce is the bridge that connects it with the businesses that need it most.
- The grey zoneBusinesses with customers and margins that sit between microcredit and the fund, in what the industry calls the «missing middle».
- The systemA business scales when its decisions depend on a system of data, costs and processes.
- Financeability X-rayA self-assessment for an SME to know which financing instrument fits it today.
- The order of capitalPhilanthropic, concessional and commercial capital expect different returns and take different risks.