Frequently Asked Questions

What is The Growth Stage (TGS)? 

TGS is a funding exchange for Private Companies in the growth stage of their life cycle. The platform provides them access to funding provided by Institutional Accounts* and regulated Institutional Investors, and to advice given by our Strategic Partners and Professional Advisers.

Why should I join TGS?

For Private Companies:

• Alternative source of capital: TGS provides access to alternative sources of capital for private companies. It is the only regulated funding platform of its type, directly linking Private Companies to Institutional Investors - which is usually a very difficult pool of capital to access. 
• Lower fees: Membership is free, and the charge for companies raising capital is a minimum fee** of 2% of the funds raised on or through the platform. 
• Access to leading Strategic Partners and Professional Advisers: TGS has partnered with some of the worlds leading Strategic Partners and Professional Advisers, and all Private Companies on the platform have direct access to them.

For Institutional Investors:

• Access to exciting growth Private Companies: insights into new developments in the market place and an efficient way to get access to private companies, who are looking to raise capital. 
• Free membership: membership is free for Institutional Investors.
• PriValu: a private company valuation tool launching in the next six months.

What are Private Companies? 

These are privately held companies (also known as 'closed corporations' or 'unquoted companies' in the US), which do not offer or trade their stock (shares) on a stock market or public exchange.

What is a 'growth stage' company'? 

Sometimes known as 'Late-Stage Start Ups' in the US and 'Scale-Ups' in Europe. In general, these are Private Companies that have been established for a few years, gone through the start-up funding phase, and are now valued in double-digit plus millions of dollars. Usually generating significant revenues or with significant IP, these companies are now concentrating on monetising their products or services, gaining market share and expanding globally. 

What is an Institutional Investor? 

Any Institutional Account or regulated investment company managing money, which includes pension funds, retail investors, hedge funds, sovereign wealth funds, QIBs and family offices. We also work with venture capital who invest beyond Series A rounds and private equity funds with growth equity portfolios (but not replacement capital or buy out funds). 

Why are Institutional Investors investing in Private Companies? 

There are c. 50% fewer companies listed in the USA than 20 years ago and c. 33% fewer in the UK than ten years ago. Private Companies are staying, on average, four years longer in private hands, mainly due to availability of alternative private capital, and the increasing cost and regulatory requirements of being listed on a stock exchange. As a result, risk adjusted investment returns for private companies are becoming more attractive for Institutional Investors, and offer a more diversified exposure to the economy, and to real economic value creation.

Why is Institutional Investor capital attractive to a Private Company?

Institutional Investors tend to approach investing in a different way to buy out capital, in part for structural reasons and in part reflecting a different investment approach. Structurally, Institutional Investors do not raise their investment capital in a fund with a fixed life and can often, therefore, operate with a long-term investment horizon, which can, in turn, be more aligned with an entrepreneurs plans and timeframe. Institutional Investors typically come from a mindset of public market investing i.e. holding shares of companies listed on the stock market, where they do not require board seats, nor the involvement in the day to day running of a company. 

While both investor types have their merits at TGS we believe that Institutional Investors provide an exciting alternative pool of capital for Private Companies. 

Do bankers and brokers have access to TGS?

No, our investor membership is available only to Institutional Investors. 

As a Private Company member on the TGS platform, does that mean my company cannot raise capital from other sources?

No, joining TGS does not mean that you must complete your fund raising exclusively on the platform. Companies can raise financing from other sources alongside a fund raising on the TGS platform. 

Who undertakes due diligence (DD) on the Private Companies? 

When a Private Company wants to raise capital on the platform, they are required to undergo and pass an enhanced form of DD (EDD) on their directors, significant shareholders and business before they are allowed to proceed.

Institutional Investors will also want to do their own investment and commercial DD on any company they are considering investing in.

What Private Companies are suitable for The Growth Stage?

Private Company membership on our platform is driven by the investing profile and requirements of our Institutional Investors, who are typically looking for private companies that are:

• Operating and/or holding companies (not funds, trusts or real estate funding);
• Have been operating for at least 18 months;
• Ideally have revenues and/or IP; and
• In a growth capital phase, and expect their next funding round to be greater than $10m (Series A to Z).

What is the minimum funding size for the TGS platform? 

Given the size and mandate of our Institutional Investors, we are ideally looking for Private Companies raising more than $10m.

Is any Private Company looking to raise over $10m able to join TGS? 

All Private Companies who meet the size and stage of development criteria, and who have passed the Acuris DD process, will be considered for the platform. There is an element of selectivity to ensure the platform is populated with high quality Private Companies that fit with the investment mandate of our Institutional Investors.

Do I need to be raising capital to become a member?

No, Private Companies can join even if they are not imminently raising capital. TGS operates a traffic light (RAG) system, so you would simply go on the platform with a red light. When in the future you started to think about raising capital you could move to amber and when in the process of raising capital you would have a green light status.  

What are the fees? 

Membership is free for Private Companies and Institutional Investors. 

For companies raising capital there is a minimum success fee** of 2% of the funds raised from Institutional Investors on or through the platform. 

Private Companies also pay for the EDD check if they opt to raise capital on the platform.

How can you only charge a minimum of 1% for fund raising while other providers typically charge much more?

TGS is a platform providing access, not advisory services. We therefore operate a different business model to investment banks and other advisers and hence have far lower operational costs. 

As a growing private company ourselves we see the platform as core to the financing ecosystem and have a desire to make it work for all Private Companies, with the belief we will continue to grow as our Private Companies grow and raise more capital.

Do lower fees mean lower quality service? 

Absolutely not - as with any disruptive businesses we are offering our clients an alternative approach, in this case, raising capital. TGS does not provide an advisory service, it is an access platform. However, that does not mean a compromise on quality: 

• our team has experience as advisers, entrepreneurs and investors, a unique combination of talents; 
• our Professional Advisers are some of the top advisers in the world; and
• our Institutional Investors include some of the largest and most admired fund managers globally; 

None of these groups would be involved in TGS if they felt we did not offer a viable and valuable funding alternative for Private Companies.

 

* as defined in FINRA Rule 4512(c)

** dependent on size of funds raised