The Camouflaged Costs of Capital

By ICR Capital Team | Webinar

Raising capital can often have hidden costs such as:

• Conversion and dilution features that are complex
• Unintended accounting/financial reporting/tax consequences
• Incremental internal/external costs

To help companies gain a deeper knowledge of various financing instruments and better plan for meeting their future capital requirements, panelists Raj Imteaz of ICR Capital and Mike Petry & Svetlana Vallie of KPMG walked through the typical capital structure journey from seed funding to IPO to financing future growth, focusing on the hidden costs of raising capital, including complex conversion and dilution features, unintended accounting/financial reporting/tax consequences, and incremental internal/external costs.

Instruments discussed included:

• SAFEs, warrants, convertible preferred shares, tranche preferred shares
• Convertible debt, call spreads/capped calls, mandatory convertibles, and perpetual convertible preferreds

Topics included:

• Economic rationale of inclusion of features from an issuer and holder perspective
• Understanding of how features impact conversion/dilution
• Pros and cons of instruments
• Discussion of accounting/financial reporting/tax treatment
• Trends in the current fundraising markets

Click here to watch the replay.