Financial forecasting support for start-up needing investment

The Client

This Isosceles client is a start-up in the defence sector. It develops systems to protect users and equipment, mainly for the UK but also for some NATO countries. It is currently pre-revenue but aims to grow significantly in the next five years.

The Requirement

Ready for more cash funding via loans and investment, this client approached Isosceles for support from a fractional CFO to get them investment-ready. They wanted help developing the 5-year business plan and financial models. They needed a CFO to produce financial forecasts and would promote a compelling story for investment and support any loan application.

Additionally, their investors needed proof of high-level financial support, a clearer understanding of their cash flow, where they were on their cash runway and a prediction of when the money would run out.

The Solution

Isosceles provided a dedicated but fractional finance team consisting of a CFO and a Financial Controller expertise to support the existing in-house bookkeeper.
Later, the Isosceles Financial Controller created a five-year model to enable the client to monitor cash flow and identify what the profit and loss accounts and balance sheets could look like, helping them determine where they could preserve cash.
The model was continually refined as the strategy changed, and assumptions were updated to reflect the 3 to 5-year strategy and investment/funding requirements.
A defence company’s existing shareholders required a rigorous financial approach and professional modelling before committing further funds to the business. They were only prepared to give the additional loan if they could understand the clients’ medium-term cash requirements.
The Isosceles Fractional CFO provided strategic input, and the FP&A specialist built a scenario analysis model to enable the client to test their ideas on funding strategies, product prices and partnerships.

Why Isosceles?

This client chose Isosceles because they could provide a fractional CFO with fundraising expertise and had worked with pre-revenue clients before. For that reason, they thoroughly understood the client’s challenges. The CFO could also access FP&A expertise to build the financial forecasts and undertake the required analysis. Afterwards, it gave the existing shareholders the clarity they needed to commit to convertible loan notes of over £1 million

Results

The client succeeded in obtaining a loan.
With an Isosceles finance team in place, the client could reassure their investor that they had a well-run finance function and access to high-level financial support.
The company’s CEO and CTO have a good basis for making informed decisions about future funding needs, and they can explain this to the other investors on the board.
Finally, the financial forecasting model has enabled the client to monitor and manage cash. This is especially important as they do not have a regular sales flow.