A founder came to us for a model to support a $2.5m raise. We found something that would have ended the raise altogether: a legal structure that could not issue equity, and a valuation $17m too high to survive a first meeting. Both before a single investor saw the deck.

01 The diagnosis

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The business did not sit in a private limited company. It sat inside a Limited Partnership: a vehicle that, in UK law, issues partnership interests, not shares. No ordinary or preference shares, no convertibles, no statutory share register, no Articles of Association, and no eligibility for SEIS or EIS relief. Every instrument a serious investor expects was structurally unavailable.
 

The entity, as constituted, could not accept standard equity investment. The founders did not know. Years of fundraising strategy had been built on an assumption that was legally incorrect at its foundation.

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02 The valuation gap

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The model, built from the company's own analytics, statutory accounts and market comparables across three independent methodologies, set a defensible pre-money range of $5–8m. Management had been anchoring conversations at $22.5m, a multiple no institutional benchmark could sustain, and one that would have ended every serious conversation before it began.

Against the LP structure, even the defensible number carried discounts: 20–35% for the structure itself, 10–15% for the lost tax relief, and a further premium for the absence of minority protections.


Restructure first. Raise second.


03 The intervention

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The recommendation was unequivocal: incorporate a clean private limited company and transfer the business into it before any investor approach. We set out the full path: due diligence on any receiving entity, the asset-transfer mechanics, the IP chain of title, SEIS advance-assurance eligibility once the right vehicle was in place, and a complete Investment Memorandum built on the stress-tested three-methodology range.

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04 The outcome

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For a founder, structure is not a back-office detail. Get it wrong, and you do not delay the raise, you make it impossible. We found the fault before any investor did, when it still cost weeks to fix instead of the whole round.

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