Author Topic: $200 million funding delay -- is this fishy?  (Read 1144 times)

mstache67

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$200 million funding delay -- is this fishy?
« on: April 14, 2018, 12:54:25 PM »
My husband is one of 3 partners in a company that's been selected to receive almost $200 million in funding from a reputable trust investor.

They are supposed to receive the funds on the 30th of this month.

Now he's found out that the other two were offered a bridge loan by the investment bank for $800,000 "in case the full funding does not come on time." They personally signed for this. My husband did not sign, because he thought it was better to just wait for full funding. (What difference does a week +/- make anyway?)

The banker is saying the money has to "go from European Country X then to London then to the US" and is so slow because of Patriot Act and other regulations.

If anyone has experience with investment banking or funding processes, is this fishy or totally normal?

Husband is wondering why the money has to "go through" a second country, and why they're giving a range of dates now, as in it could be the 30th, could be a week or two later. I would think that an amount that large would be accounted for closely enough to have a specific clearing date.

The broker's company that put the investment together also has just a landing page as a website.

Has anyone worked in investment banking or startup funding? Is this totally funky? My husband and the partners are very experienced in their industry, but not in the funding world.

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mozar

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Re: $200 million funding delay -- is this fishy?
« Reply #1 on: April 14, 2018, 02:13:51 PM »
I know little of this industry but the whole thing looks like a scam. What does it mean his company was "selected " to receive money? I thought you had to pitch yourself to funders and then you work out how many shares they're buying.
Don't sign anything and I would assume no money is coming at anytime. But if it does, great.
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bacchi

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Re: $200 million funding delay -- is this fishy?
« Reply #2 on: April 14, 2018, 03:32:39 PM »
One of the startups I co-founded received two rounds of funding from investors in Europe. There was never any sort of wishy-washiness about when it would arrive since banks in European countries use SWIFT, too. We never received anywhere close to $200M, though, which could be the problem.

Does the "reputable trust investor" know that they're funding $200M? Has anyone spoken to them or is it all through a 3rd party?

Reynolds531

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Re: $200 million funding delay -- is this fishy?
« Reply #3 on: April 14, 2018, 04:55:18 PM »
It depends on who your counterparties are. I would follow the advice of the investment bank advising you. Escalate within the organization if needed.

Also a bridge "loan" I don't understand. That seems fishy.

Paul der Krake

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Re: $200 million funding delay -- is this fishy?
« Reply #4 on: April 14, 2018, 04:58:56 PM »
Sounds like a question for the company's general counsel.

Sibley

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Re: $200 million funding delay -- is this fishy?
« Reply #5 on: April 16, 2018, 03:18:50 PM »
Given the regulations around anti-money laundering, which are even tougher in Europe than the US, I would investigate. London is a MAJOR financial center that it's possible that they're using London markets for foreign exchange purposes, but the bank should know how to do this with exact timing.

TL8

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Re: $200 million funding delay -- is this fishy?
« Reply #6 on: April 17, 2018, 12:48:16 AM »
For a proposed transaction of this size, I assume the company must have engaged legal counsel. Your husband should absolutely consult with counsel, and he should also be aware that the company's legal counsel does not represent him personally (unless they've separately agreed to do so, which is very unlikely). Legal counsel is hopefully an experienced corporate law firm and not some local lawyer way out of his/her depth. When hundreds of millions are at stake, it's worth talking to an experienced lawyer to make sure they don't see any red flags.

Also, if your husband is suddenly being asked to sign a $800,000 bridge loan in his personal capacity, he should strongly consider retaining a lawyer himself to review the documents and assess the situation. Is the investment bank well known and reputable?

gooki

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Re: $200 million funding delay -- is this fishy?
« Reply #7 on: April 17, 2018, 06:00:10 AM »
Fishy as fuck.

If there’s no rush for the funding, why is anyone considering a loan, let alone signing up?
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jeroly

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Re: $200 million funding delay -- is this fishy?
« Reply #8 on: April 17, 2018, 06:19:18 AM »
What is even fishier is the idea that someone would look to get advice for anything related to a $200MM transaction from a retire-early-with-low-consumption forum.

If this is a real situation and not just trolling, tell your husband that he and his partners are idiots for not doing this with experienced legal counsel and M&A experts like an investment bank or financial consulting firm, and that once they've decided on such, trust them to advise on these matters.

mm1970

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Re: $200 million funding delay -- is this fishy?
« Reply #9 on: April 17, 2018, 11:22:18 AM »
Can't speak to the "going through another country", but bridge-loan until the real cash comes through is normal, because that shit never happens on time.

My company is on round...5?

mstache67

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Re: $200 million funding delay -- is this fishy?
« Reply #10 on: April 17, 2018, 09:54:24 PM »
Ok so today they had to answer questions on the phone with a bank regulator for hours, and have decided not to take the bridge loan because it seems like the funding is definitely coming through. I guess there's funding coming with it for 3 other companies too so the actual amount being transferred is much larger. They're saying that is the reason for the delay. We shall see. They do have one of the largest law firms in NY retained and an investment bank, but the investment bank works for the investor.

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