The Escalator Process
Escalator - working for all
Escalator works with individuals looking to invest and companies looking to raise capital. If you are considering an investment or would like your company assessed for its investment readiness, Escalator can help you.
All our services are underwritten by New Zealand Trade and Enterprise. A success fee applies only when a deal is secured. No deal, no fee.
Escalator specialist providers have extensive experience in early-stage capital investment markets. Here's how Escalator can work for you.
Training
Training is available for all businesses that display high-growth potential. Our range of workshops are specifically designed to add value to you whatever stage of the investment journey you're at.
Even if you do not intend raising capital for a few years, we recommend all business owners attend our Essential Guide to Raising Capital. This workshop provides background information on how to build a business in a way that attracts interest from would-be investors and - more importantly - generates shareholder wealth.
Our training workshops cover a range of subjects, including:
• De-risking your business - what investors look for in businesses
• Valuation methods
• Terminology used in early-stage investment
• Raising capital in New Zealand
• Power Pitching.
Power pitching is one of our most popular workshops. It's an interactive workshop that focuses on creating effective elevator or investment pitches. Most businesses struggle to convey their message in elevator pitches. In the tough investment arena this can lead to instant turndown or - worse - black-listing among other investors. Power Pitching will ensure you are able to effectively communicate your story. Book your place at our Power Pitching workshop today.
Apply today for any of the Escalator services
If you would like to apply for any of the Escalator services you've been reading about, simply access our one-page business summary drop sheet. (The drop sheet process is managed by a web-based programme called Angel Soft and is where all your Escalator activity information will be stored.)
If you have a preference for a specific Escalator service provider simply add their name under Preferred Broker field on the drop sheet form.
If you require any help or information with the application process, our helpdesk will be happy to take your call: 0800 800 748.
Once we've received your application our helpdesk will contact you within three working days.
Here's how Escalator can help you
At the initial Needs Assessment stage, our Escalator advisors will be looking to ensure that business owners are clearly able to explain and demonstrate:
• The way in which your product/service satisfies a compelling customer need
• An overview of the profitability of the product/service
• An overview of growth potential.
This information can be assessed via the information you provide in your drop-sheet application or by attaching a copy of your business/strategic plan to your application. The Escalator helpdesk can help you with this stage of your application. Call 0800 800 748.
Step 1: 5+5 Gap analysis/needs assessment
At this stage an Escalator advisor will work with you to evaluate deal options. This will usually involve multiple interactions, meetings and research. This exercise also aims to identify the five key elements that are most likely to attract a would-be investor to your business, as well as five issues investors may have with your business.
Our Escalator advisors will consider:
• What stage your business is at and how this will influence the type of deal you're seeking - and the target market
• Your competitive advantage, management team, channels to market, business model, any existing legal issues that may limit ability to secure a deal and the financial projections of the business
• The best type of deal to enable your company achieve its growth potential. This could include capital raising, strategic partnerships or a licensing transaction.
• The current investment market and the ways in which this may affect your opportunities
• Ways in which your business proposition gains maximum appeal
• The steps necessary to ensure your business is investment-ready
• Any additional training needs necessary to enhance your proposition
• How receptive your company is to the advice offered.
Once the Needs Assessment is complete Escalator's Client Services Team will contact you to let you know the outcome and suggested next steps.
If your business has been identified as ready for deal preparation your Escalator advisor will work with you to prepare and request funding support from the Escalator Deal Preparation Panel. (Access to funding for investment grooming and deal preparation is stage-gated with a maximum of $8,500 allocated per company at the first stage and a total of $20,000 available via New Zealand Trade and Enterprise funding.)
Step 2: Escalator peer review and Funding Panel
The Escalator Panel is made up of four senior advisors. The panel meets regularly to assess the potential of each business to achieve successful deal-closure. Those businesses will then receive New Zealand Trade and Enterprise funding to support grooming preparation and deal-brokering services.
The Panel will make its assessment based on your successful pitch. We strongly recommend you attend an Escalator Power Pitching [link] workshops before presenting to the Escalator Panel. Visit the Training [link] section of our website to book your place on the workshop.
Before making your pitch you will also be contacted by a member of the Panel for a brief peer review of your business. This review ensures your company is best positioned to gain Escalator funding.
The Panel will assess your positioning based on the information set out in your drop sheet and your needs assessment, so please ensure your drop-sheet information remains up-to-date all the time you are engaged in the Escalator process - and includes financials.
Note:
If you are invited to present to the Panel you will need to prepare a verbal pitch of five minutes or less, in consultation with your adviser. This pitch should cover:
• The way in which your product/service satisfies a compelling customer need
• An overview of the profitability of the product/service
• An overview of growth potential
• An overview of your team
• The type of deal you are seeking, including valuation and equity expectations.
We strongly recommend you attend an Escalator Power Pitching workshops before presenting to the Escalator Panel. Visit the Training section of our website to book your place on the workshop.
If your application to the Panel is successful, you will be required to sign a contract (mandate). The panel will provide guidance on how the New Zealand Trade and Enterprise funding will be allocated, typically focusing on any major gap resolution as identified in the Needs Assessment.
If your application is not successful, you will be provided with feedback. You may have the opportunity to re-present at a later date.
Step 2b: Signing the mandate and deal preparation
The mandate is an agreement between you and your broker covering the terms and conditions which will apply to any deal your broker negotiates on your behalf. This will include payment of a success fee (max 6% on the amount of capital raised). If your broker is unable to complete a successful transaction on your behalf you will not have to pay a fee.
Once the mandate is signed, your broker will work with you to prepare the deal. This will ensure your business is best positioned to be presented to one or more investors or strategic partners.
If there is no investor or partner interest at this stage, you will be notified and exited from the Escalator process.
Deal preparation may include any of the following activities and is dependent on any specified transaction requirements.
• Addressing any issues arising from the Needs Assessment and Panel feedback
• Pre due diligence review of legal documentation and agreements (if required, often includes patent validation)
• Identifying appropriate Investor/targets to be approached
• Help with preparing an investor pitch
• Help with preparing any financial information, as required by prospective investors
• Any general advice required to ensure the business is investment-ready
• Help with documentation and presentation
• Review or clarification of any existing shareholder agreements or legal contract that may affect a transaction .
Step 3: Deal brokering
Once an investor or strategic partner indicates their interest in pursuing a transaction, deal brokering can begin. An Escalator broker will assist with all negotiations involving potential investor(s) or partner(s), structuring the transaction, managing any due diligence and advising on the final documentation. The cost of this activity will be covered by the success fee element and paid only in the event of a completed deal. The successful end-stage will see your company complete a transaction that will enhance your business growth and prosperity.
You could become a member of our Top 25 Graduate Club!
Every year Escalator aims to identify and provide additional services to its Top 25 businesses. These are typical those businesses that have demonstrated the most growth and investment potential. A programme of specific events will be held for these companies each quarter.
Realistic timeframes
For those businesses successful in reaching Escalator's Deal Preparation stage, it can take a further 6-12 months to complete a deal - sometimes longer. Some clients have closed a deal in just three months - others have taken up to two years.
Delays may be the result of additional work required to get the business investment-ready, lack of suitable investors/partners, or difficulties in negotiating mutually acceptable terms. Although there are no hard and fast rules, you should discuss timeframes based on the experience and knowledge of your Escalator advisor and your specific situation. Your readiness, industry group and/or type of deal you are seeking may also have a bearing on the pace and likelihood of finding suitable investors.
Confidentiality
Information received from you by New Zealand Trade and Enterprise and Escalator is held in the strictest confidence. However, New Zealand Trade and Enterprise is subject to the Official Information Act 1982 and, as such, any information held about you in relation to Escalator is subject to the Act and may be released upon request.
Disclosure and use of information.
The information in the Initial Assessment and subsequent Needs Assessment may be personal information as identified by the Privacy Act 1993. You are entitled to have access to, and to correct, that information. EDANZ and Deloitte, joint New Zealand managers of Escalator for New Zealand Trade and Enterprise collect that information for the following purposes:
• To register Escalator participants
• To assess the suitability of the business for investment capital
• To alert you to details and information about Escalator
• To allow New Zealand Trade and Enterprise and its training service providers to administer the following programmes: Escalator, Investment-Ready Training, Enterprise Training, Pacific Business Training, Maori Trustee Training and Exporter Education
• To allow New Zealand Trade and Enterprise, its auditors or monitoring agencies to survey participants about Escalator
• To undertake compliance audits of New Zealand Trade and Enterprise's service providers engaged in delivering Escalator and to provide feedback on their performance
• To provide further information to you about other websites and services which New Zealand Trade and Enterprise considers maybe of interest to you
• To allow New Zealand Trade and Enterprise and its monitoring agencies to monitor and audit the programme and report to Government.
Escalator reserves the right to publish your involvement in the process if your receive deal grooming and preparation services and publish summary details of any money raised in the Young Company Finance Bulletin. This would be a short form-business description which would exclude financials.