Easiest Companies to Fund in 2024 (Tier List) – Capital Raising – Investment Banking
In this video, I’m going to go through the most easy to fund deals. That I’ve seen just based on where we’re at with regards to helping people prepare their capital raises. And this is not obviously a definitive list or anything. But these are just based on what some of our clients and some of the people in our networks are experiencing.
https://www.youtube.com/watch?v=ODODdQRvgZk
in this current market. So right now, to those who don’t know, this is a tier list, and basically it’s a way of categorizing things from best to worst. So, you’re going to see some silly images here, and basically the idea is transportation companies, pre revenue software startups, AI startups, car washes, Senior Home Care Living Facilities, Hotels, New Construction of Multi Family, and this is a duplicate, and this is um, Multi Family, Existing Multi Family Acquisition, and Segal Family Fix and Flip.
So, the categories we have are God Level, meaning that you can get funding like this, very bankable, meaning it’s really easy to fund, bankable, hard to fund, don’t waste your time. People will pay you not to do this type of deal. So this is the worst thing you can ever do. And so this is just based on what we’ve seen.
So, I’d go from left to right. So, let’s see, transportation companies. So, in earnest, I really haven’t seen, I’ve seen a lot of people talk about transportation companies, and for some reason, There’s just something about these transportation companies that people in my network are just having trouble like getting through the finish line And it’s just you know, we’ve seen a lot of other types of business acquisitions get done and people raise capital for them But it’s just this one.
That’s that’s a struggle. So I’ll put this as hard to fund And this is purely based on what we’re experiencing, not based on anything, you know, not anything like beyond that. But I’ll try to also mention that generally these types of businesses are really acid lights. Their cashflow, sometimes their cashflow have the asset life, the equipment financing and lending that’s available isn’t really that crazy.
So usually people will want to raise equity for these types of deals because the types of debt that people can find is not that substantial. The, these businesses, there’s very little, um, there’s almost no real, there’s usually always no real estate that’s connected. And usually the types of lenders outlents of these businesses won’t really make it easy.
To fund a hundred percent. So I’ll just put this in the hard to fund not because it’s universally hard to fund But just based on what I’ve seen And what some of the members have been complaining about so let’s go to another one. So pre revenue software company I’ll put this as The worst possible. Um, I personally know two people who have raised millions of dollars for their software companies and they lived in San Francisco for almost 10 years.
Uh, so I strongly recommend staying away from anything pre revenue SaaS. Uh, for those in SaaS and pre revenue startups, I recommend just bootstrap. Uh, you know, or unless you actually know the business and you live with angel investors for years and understand that game. It’s a game I don’t understand or Raise.
com, we don’t really participate too heavily in pre revenue startups. So, AI startups. So I put this as
If it’s cash flow, and I put it at bankable, just because of the hype. People are taking advantage over the hype. So, take advantage of the hype if you want to, and it’s a It seems to be a very bankable thing to do right now. Uh, because there are a lot of people that have I’ve got reports that there are some people that are really interested in In AI startups.
So next, car washes. I’ll put this as bankable, mainly because one of our Mazes of Rays. com clients actually acquired a car wash, and so I’ll definitely put it as a bankable type of deal. It’s very simple, especially for car washes that are cash flowing, they serve a business, and there’s real estate attached.
I put it in general as bankable because I’ve seen people making decent revenue, like, online business level type of profit on it. And you also have the appreciation of real estate. So in general, I’d say it’s a definitely a really interesting bankable type of business, especially the ones that are simple.
So next senior home care living facilities. So I put this as God level. And the reason why I’m putting this at the top is because the, in there was a span, I think in quarter two to quarter three, 2023, we’ve seen a lot of success stories around senior home care living facilities. And these types of facilities are just fantastic in terms of the profit margins, the price that people are paying for some of the people that are serving these, you know, the senior home care or the people in the senior citizens and using the workspace.
And the appreciation on the real estate is there. It’s just and plus, I guess the main thing is most people are either baby boomers or they’re juniors. Like either they’re baby boomers or they’re not baby boomers. And most people who are benefiting the most. Uh, and have the most amount of wealth are baby boomers.
And the people who are young, who are millennials, you know, Gen Z’s, etc. They depend on credit. So they don’t really have much wealth. Most of the wealth is in the older class in North America and in the West. So, because Canada, America, we’re only replay mostly we’re replenishing the youth by immigration.
It’s only America that’s kind of trying to not do it as much, but the point I’m making is Older people generally have the wealth and then they’re going to retirement facilities where they’re able to afford these costs and they’re more old people than young people in the west. So it’s just a business model that makes sense.
Uh, and I’ve seen a lot of success around this. So hotels, so I’ll put hotels in, hmm, where should I put hotels? I’ll put hotels in
Bankable. And the reason why is because we had several people that Uh, own hotels who we’re currently discussing with and they walk through some of the process of owning hotels And they say that yeah totally the coronavirus Time of the year is over. And because of all that coronavirus hype is all over, you know, people are really opening up to the hotels.
And the only problem with hotels is that the revenue is very lumpy. So people that want to raise money from hotels, uh, we’ve seen people that get excited in having something called a high hurdle rates. So for example, if a hotel makes a lot of profit for the people that participate in their deals, people will, uh, have a, they’ll have a bigger split.
of the funds that they get based on how, how much, um, return the deal makes. So like you can have a 10 percent hurdle rate. You can have a 20 percent hurdle rate. You can have a 30 percent hurdle rate. That means if it makes 30 percent in the year, somebody would entitle themselves to. To a bigger profit split between them and potential people that fund the deal.
So it’s it’s lumpy It’s a lumpy business. So lumpy means like some months could be amazing. Some months could be rough so I definitely think it has come from hard to fund to bankable, especially coming out of the pandemic and Construction, so let’s say Multifamily construction. I would put this in Hmm, where would I put this multifamily construction?
I would put it in. It definitely depends. There’s definitely this one. I’ve seen all over the map. I’ll put it more in. Harder to fund and the reason why I’m doing that is because somebody has to be a really amazing developer. for the transaction to be easier to fund, in my opinion. So, there are some developers that I know that have a lot of experience, that they would definitely have a home run in development.
But then there are some people that, you know, that aren’t really as experienced, and they’ll have such a hard time. The other thing is, I think the reason why it could be bankable, and I almost want to put it in between bankable and hard to fund, is because And obviously it depends on the numbers, but in general, if somebody has high appreciation, then they can go to bankable.
But the problem is there’s this big hold period. So if people want to raise money for a development, they have, there’s this whole period of time that you have to wait before it become, before any cashflow can happen, you know? So that’s one problem. Another problem is there’s, there’s something called, there’s a zoning risk, there’s permitting risk, and then there’s licensing risk.
So those types of risks Prevents people, like people have to spend money, uh, to check to see if you’ll be allowed to even build the thing that you’re supposed to build before it’s quote unquote something called shovel ready, meaning that you’re ready to build. So if it’s a shovel ready deal and the numbers make sense and the process, the, the person is experienced, then I put it in bankable.
So let’s just say this, let’s say this is for. The bankable one is if it’s shovel ready and experienced sponsor with good numbers. The harder fun one is if there’s, if it’s not shovel ready and they’re not good numbers. So this, let’s just put it like this, right? And so this one is multifamily, existing multifamily deal.
I’ll put this in bankable. The only reason why I’m not putting it in very bankable is depending on the deal and the interest rates. So at the time of the recording, the interest rates are really high. So. So people are really taking a nosedive when it comes to certain types of multifamily deals. And it’s really hard for some people to find multifamily deals to acquire based on the types of interest rates that people are charging.
But in general, man, like if it’s cash flowing, it’s a home run. And so I totally recommend it. And then the last one I’ll do for today is the single family, single family fix and flip. So I’ll put single family fix and flip ads. It really depends on the deal. So, I can’t really put a universal one. Um, but let’s just put it at bankable.
I was tempted to put it at very bankable, but I’ll put it at bankable because It really depends on the deal. This is just a single family fix and flip. It’s not really as good of a mansion as it is here, but In general, I like fix and flip for a few reasons. One, you see Blackrock buying up single family.
And they’re buying up tons of them. Because we’re in a unique spot where Americans are spending more than they ever have on rent and The rental prices are also increasing and renting has become such a norm Gen Z’s, Millennials, the younger people are more used to renting and not owning things. Whereas the senior generations, you know, they’re dying out Unfortunately, but it’s just a reality that they’re dying out.
People are going to be used to renting everything. So the result is People are, people are going to need to get used to the idea of, of renting. And renting in build to rent type of housing is really popular. You also have the ability to fix and flip. And there are some people that, many people can get into the business of fixing and flipping.
And I think single family houses, That’s the easiest road for somebody to start being a fund manager, in my opinion, because the problem with being a fund manager, if you want to acquire multiple deals at once and raise money for multiple deals is it takes so much skill to acquire multiple commercial properties and have a fund around that.
Because acquiring one commercial property requires a lot of skill in and of itself. Whereas if you do a fund for that, it’s so much skill and plus most people won’t invest into somebody’s first fund for a sophisticated type of underlying deal. But, single family is very simple. Single family goes off the market quick and single family fix and flip, it makes sense to do a fund for single family fix and flip because they go off the market quick.
So, I definitely would recommend people do single family fix and flip if in the future you want to do a fund in the short term. And it’s something that the mass market can get into because like almost anybody can get into it because everybody understands or I guess almost everybody will understand how a single.
I think this is the thing that most people should get into because everybody has access to it. It’s universal. You don’t have to be a hotel expert or a car wash expert. It’s the most universal one. And I think a lot of the success just depends on the, um, the sponsor. So with this, that’s my tier list. What do you think?
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Easiest Companies to Fund in 2024 (Tier List) – Capital Raising – Investment Banking
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