What Happens After You Say Yes: The Growth Capital Process Demystified
By Matt Behrens, Managing Partner | 6 min read
The most common question I get from business owners considering growth capital isn’t about valuation or terms—it’s about process. “What actually happens after we decide to move forward?” The uncertainty about what comes next often prevents owners from exploring partnerships that could accelerate their growth.
The growth capital process doesn’t have to be mysterious. While every situation is unique, there’s a predictable framework that most partnerships follow. Understanding this process helps owners prepare appropriately, set realistic expectations, and navigate each phase successfully.
Here’s what actually happens from that first “yes” conversation through partnership closing and beyond.
Phase 1: Mutual Evaluation and Term Sheet (Weeks 1-4)
The process begins with deeper mutual evaluation. You’ve expressed initial interest, but both sides need to confirm this is the right partnership before investing significant time and resources.
During these first few weeks, we’ll have detailed discussions about your business model, growth opportunities, competitive landscape, and management team. You’ll learn more about our investment approach, portfolio companies, and how we typically work with management teams. Most importantly, we’ll explore whether there’s genuine alignment on vision, timeline, and approach.
This isn’t due diligence yet—it’s relationship building and strategic alignment. We’re evaluating whether we can add meaningful value to your business, while you’re assessing whether our expertise and approach fit your needs.
If mutual interest develops, this phase concludes with a non-binding term sheet that outlines the basic economic structure, governance arrangements, and key terms of a potential partnership. The term sheet isn’t a commitment, but it provides a framework for more detailed negotiations.
The key insight: This phase should feel collaborative, not adversarial. If the process feels like an interrogation or if there isn’t natural chemistry, that’s valuable information about whether the partnership will work.
Phase 2: Due Diligence and Documentation (Weeks 5-12)
Due diligence is where the real work begins. This phase involves comprehensive analysis of your business, industry, and growth opportunities. It’s also where most owners feel the greatest anxiety about the process.
Financial due diligence typically includes several years of historical performance, detailed analysis of key performance indicators, cash flow patterns, customer concentration, and growth drivers. We’ll want to understand not just what happened, but why it happened and whether the underlying drivers are sustainable.
Operational due diligence focuses on management systems, competitive positioning, operational scalability, and growth readiness. This isn’t about finding problems—it’s about understanding the business deeply enough to be helpful partners and to identify the highest-impact improvement opportunities.
Legal due diligence covers corporate structure, material contracts, regulatory compliance, intellectual property, and potential liabilities. This work is handled by experienced attorneys who specialize in growth capital transactions.
Meanwhile, legal documentation begins in parallel. Investment agreements, shareholder agreements, and governance structures are negotiated between legal teams, though key business terms are usually resolved between principals.
The most important thing to understand about due diligence: its primary purpose isn’t to find reasons to walk away—it’s to understand the business well enough to be valuable partners and to identify areas where we can add the most value.
Phase 3: Management Presentations and Board Planning (Weeks 8-10)
During due diligence, you’ll typically present your business and growth strategy to our broader team and investment committee. These presentations aren’t just about gaining approval for the investment—they’re opportunities to refine strategy and begin planning our partnership approach.
The best management presentations focus less on historical performance (we’ll understand that from due diligence) and more on growth vision, strategic priorities, competitive differentiation, and how growth capital will accelerate progress.
This is also when we begin discussing board composition, meeting cadence, and governance processes. If you haven’t worked with institutional investors before, we’ll explain how board meetings work, what materials are typically prepared, and how decisions are made.
Many owners are concerned about board governance, but most find that having experienced board members actually improves decision-making. Board meetings provide structured forums for strategic discussions that might otherwise get lost in day-to-day operations.
Phase 4: Final Negotiations and Closing (Weeks 10-14)
Final negotiations typically focus on working capital adjustments, management equity arrangements, representation and warranty provisions, and closing conditions. Most economic terms were established in the term sheet, but there are always details to resolve.
The closing itself is usually anticlimactic—signatures, wire transfers, and legal filings. But the real milestone isn’t the closing; it’s the transition to working partnership.
Phase 5: Integration and Early Partnership (Months 1-6)
The first six months after closing are critical for establishing productive working relationships and early wins. This period typically involves several key activities:
Strategic planning often gets renewed focus immediately after closing. With growth capital secured and board structure established, it’s an ideal time to revisify growth priorities, resource allocation, and timing.
Operational improvements usually begin quickly, particularly in areas like financial reporting, management systems, and strategic planning processes. These aren’t changes for their own sake—they’re infrastructure improvements that support scaling.
Network introductions happen throughout this period. Growth capital partners typically have extensive networks of potential customers, suppliers, service providers, and talent. Making these introductions strategically and at the right pace is an ongoing process.
Quick wins are important for building confidence in the partnership. Whether it’s a key hire, an important customer win, or an operational improvement, early successes help establish momentum and trust.
What This Process Really Tests
The growth capital process tests several things beyond just financial performance:
Management capability: Can your team handle the increased transparency, reporting, and strategic planning that comes with institutional capital? Do you have the systems and processes to support scaling?
Strategic clarity: Are your growth plans well-thought-out and executable? Can you articulate why growth capital will accelerate progress in ways that debt or organic growth wouldn’t?
Cultural fit: Will the partnership dynamics work? Do you share similar values about how to build businesses and treat employees, customers, and communities?
Adaptability: How does your team handle feedback, new ideas, and process changes? Growth partnerships work best when management teams are excited about continuous improvement.
Common Process Concerns and Realities
“The process is too invasive”: Due diligence is comprehensive, but it’s not punitive. We’re investing millions of dollars and years of our time—thorough evaluation protects everyone’s interests.
“It takes too long”: A 12-16 week process for a multi-year partnership isn’t unreasonable. Rushed transactions often lead to misaligned partnerships.
“They’ll find reasons to walk away”: Our objective isn’t to find reasons to avoid investing—it’s to understand businesses well enough to be helpful partners. Most processes that begin with mutual interest reach successful conclusions.
“We’ll lose confidentiality”: Professional investors handle confidential information regularly and understand the importance of discretion. Confidentiality agreements protect sensitive information throughout the process.
Preparing for Success
The business owners who navigate this process most successfully are those who prepare thoughtfully:
Organize your information: Clean financial records, clear corporate structure, and documented processes accelerate due diligence and demonstrate management sophistication.
Think strategically: Be prepared to discuss not just what you’ve accomplished, but where you’re going and how growth capital helps you get there faster.
Involve your team: Include key managers in appropriate parts of the process. Growth capital partnerships work best when the entire leadership team is aligned and enthusiastic.
Ask questions: This is a mutual evaluation process. Ask about investment approach, portfolio company experiences, board processes, and how conflicts are resolved.
After the Partnership Begins
The most successful growth capital partnerships are those where the process creates foundations for effective ongoing collaboration. The transparency developed during due diligence continues through board meetings. The strategic discussions begun during management presentations evolve into quarterly planning sessions. The relationship building that starts in early conversations develops into trusted advisor relationships.
The owners who get the most value from growth capital partnerships are those who view the process not as something to endure, but as the beginning of a collaborative relationship focused on building something bigger than either party could achieve alone.
Understanding the process reduces anxiety and enables better preparation. But more importantly, it helps owners approach the process as partners rather than supplicants, which leads to better outcomes for everyone involved.
Considering growth capital for your business? Contact us for a confidential conversation about the process and how to prepare for a successful partnership evaluation.