The Challenge
We recently worked with a modular property developer.
The question asked: How do we source funding to execute on our significant pipeline of
development opportunities?
The startup had an innovative new solution and had certainly demonstrated MVP. The
challenge was that their different approach to development was not understood by traditional
lenders.
Assessed the current state of market and company
LTV Partners has subject matter expertise in the ANZ developer market. We were therefore
able to leverage this expertise in undertaking our assessment process to first identify our
client’s comparative advantage in the market. Second, utilising our capital markets and
lending relationships we were able to identify the hurdles the client faced in sourcing funding.
Investor Readiness to the fore
For this company they had followed the tried and tested path to funding. Unfortunately, that
path is premised on historic development processes. And our client was not building to
traditional development processes – they were shaking things up!
Their comparative advantage had become their achilles heal in sourcing funding because it
wasn’t well understood. We identified the problem and identified the following issues: the
funding drawdown and security differed from traditional development processes; the modular
build has different consenting and quality assurance processes; and there were perception
risks around quality and delivery model (when in fact the scalable higher quality product was
part of their comparative advantage).
What are advantages in our client’s development model were typically seen as hurdles by
the funders. Time to change up the story.
We tailored an Investor Ready solution for our client including improving the investor story
and identifying the right funders for our client. We then ran a process to engage the funders
(including educating them to resolve hurdles, perceived or otherwise). And last we ran the
process to source the funding from inception, through due diligence, to decision assessment.
All the while supporting the client with what we call quarterback advisory.
Conclusion – lower risk equals better returns
By delivering the above, we were ultimately able to change the risk perception. In doing this,
we cleared the path to a number of funding facilities and a superior pricing. Ultimately lower
risk for our client plus optimised returns on their capital.
