Shieldcast: Episode 005

Hosted by Geoff Dunnett

Fundraising: Christian Gabriel on capital raising and creating private company equity liquidity

Concluding our special five part Fundraising series, this episode of Shieldcast talks with the Capdesk founder about capital raising, preparing your investor shop window and creating private company equity liquidity for investors and employees.

Fundraising: Christian Gabriel on capital raising and creating private company equity liquidity
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Christian is co-founder and CEO of fast-growing fintech platform Capdesk, founded on the wisdom of 10 years experience in the equity investment sector as a director for the investment platform FundedByMe and as managing partner of the Corporate Finance House, providing specialist financial guidance.

Capdesk is the rising star of the alternative corporate investment market by helping businesses to release equity through employees and partners. Recently working with Shieldpay and Seedrs, Capdesk processed almost £1M in liquidity in July 2020 alone, using their new secondaries feature.

In this episode of Shieldcast, Christian chats with Shieldpay’s Geoff Dunnett and discusses:

  • How building relationships early on in the company lifecycle can yield capital later on
  • Why venture capital funding can change the dynamics of your investor relations
  • When to plan for fundraising rounds that will complement your company culture
  • Why private companies are staying private for longer and how Capdesk helps employees get much needed transparency and liquidity over their shareholding
  • What happens practically when you’ve raised Series A funding, with the right people in the door to start delivering results. 

Listen to this fundraising edition of Shieldcast to find out more!

Read the transcript of this podcast

Geoff: So today we have Christian Gabriel, CEO and founder of Capdesk. Welcome Christian. Christian has ten years’ experience in the alternative investment sector as a director for the investment platform FundedByMe and is managing partner of the Corporate Finance House, HeartReacher.

Christian’s mission is to distribute ownership and private equity companies more fairly and provide more transparency in the private markets. Christian is very passionate about new ownership, distribution models, and regularly speaks about this topic at business schools and financial institutions. Well, Christian this doesn't seem like a better introduction for what we're going to be talking today, both as a partner of Shieldpay and as a client of ours. I'm really looking forward to hearing about your thoughts on the fundraising journey for start-ups and, and more about Capdesk, and then what you guys have planned.

So, start us off with the 30 second elevator pitch. What is Capdesk and what do you guys do?

Christian: Thanks Geoff, no pressure – I’ll do my best! So, I think in short, companies are staying private for much longer, and what that means is that never before has private companies that are not listed on the stock exchange had this amount of shareholders, this amount of funding, but also this amount of employee shares issued.

And what that means is that if you are a shareholder or an employee with equity in a company that's private is, first of all, there's no transparency so you don't really know how much you invested of your employee share grant. If you're a shareholder, you don't really know the proper dilution, and the company needs to deal with all of those records. And that costs a lot of money yearly.

Secondly, there's not a liquidity, meaning that you won't ever get to see any cash, even though you've got equity in these private companies, because they're not appealing, so how would you get cash? Capdesk is an equity management platform. We launched back in 2015, where we digitise all the equity on a platform, helping the company itself manage employee share plans and cap table, and shareholders in a very efficient way.

At the same time, we also now working together with Shieldpay, as an example, and seeders to create a secondary market whereby we can create liquidity in the private markets, which is very exciting.

Geoff: That is very exciting. And so, in that journey from 2015 onwards, you guys must have gone through a number of funding rounds. What’s been that experience for you and well, I guess before that, you've been involved as an investor. What are the key lessons that you've taken through all of those? What have been experiences and how could you share those with other people?

Christian: Yeah, I think if I was to say one thing about fundraising, it's what I've experienced myself. It's that when you fundraise, typically you think now I'm going to use six months for fundraising and then you start fundraising, now close the round. But I would say that the relationships you build very early on in your career, those are the ones that actually amount to funding.
So, when one of my friends asked me, “How on earth would you ever find somebody who wants to put £million into Capdesk?” Then I told him, the truth is I don't really look for the money, I look for who knows about this space. My very, very bad example and forgive me for this bad example, but for some reason I'm stuck with it:

If you were a computer game designer, so you're making computer games online and you wanted to design a chair, the first thing you would do is you'd probably meet with a designer who designs computer games, who designs like animations or computer games. And then you said, ‘Hey, I want somebody who can design a chair’, and then he would introduce you to five other people. And then one of those people, he didn't necessarily design chairs for computer games, but he designed something else, then lastly, you end up with this one person who is the expert of designing chairs and furniture for computer games.

The reason for this bad analogy is that you don't look for the money, you look for people who are really interested in this space. And the only way you meet them is just by asking people who are in them, the reverie of the corners of the markets and you tell them about what you're doing and if they know anybody that's interesting. And then all of a sudden you speak to somebody that's extremely interested in what you do and then they happen to potentially one of them also have money and then they give you money.

So never just look for money. Look for people that actually care about the space you're in and then when you need money, you can go back to them and ask them, “Who do you know? Who's got money?” I think that's a better way of doing it than just looking for money first.

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