Blue Moon Advisors Bridges The Gap Between Companies Seeking Access To Capital And The Investment Community

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Blue Moon Advisors, Inc. is a due diligence, capital readiness and document preparation company serving entrepreneurs, start-ups, and companies seeking alternative equity and debt capital. Below is our recent interview with Tony Drexel Smith, CEO of Blue Moon Advisors:

Q: Tony, let’s start with your background. What were you doing before Blue Moon Advisors?

A: I’ve been in business finance directly and indirectly for 25 years (Since April 1993 when I bought my first business – I’ve been a paid consultant helping others since 1995). I created Blue Moon Advisors in 2015 to leverage all the financial relationships I’ve made over the past 10 years with investors (brokers, agents, direct investors and lenders) that have financed my client’s transactions. Throughout the 25 years I’ve served as an interim C level officer for many of our start-up clients. I’ve also owned food and beverage businesses with my wife (2 restaurants, a commercial kitchen and a gift basket company). I’ve spend a good amount of the past 9 years on research – tracking data. For example, I can tell you with certainty that our average funded client is in the seed, early-stage series phase of capital and raises $977,000. 87% of our clients that score above 925 on our Capital Readiness and Due Diligence process raise capital. 85% of the highest scoring clients (CRR Score above 925) are still in business over the past 10 years.

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Q: Could you provide our readers with a brief introduction to Blue Moon Advisors?

A: We complete our engagements in a three-step process: Phase 1 – Capital Readiness Report; Phase 2 – Business Finance Document Packaging; Phase 3 – Managed Virtual Portal. Our mission is to serve US-Based Companies and entrepreneurs by providing them a proven assessment process, business finance document preparation services and a managed virtual document system that cumulatively simplifies and streamlines the process of gaining access to business capital in a compliant, professional and timely manner.

The CRR has five primary purposes:

(1) Coaching potentially successful companies by isolating critical weaknesses,
(2) Ensuring that the correct type and amount of capital are sought,
(3) Determining the funding feasibility of the applicant,
(4) Predicting success potential by identifying companies most likely to surpass the three–year threshold of an early-stage company, and
(5) Dissuading unqualified applicants from moving forward.

Q: Tell us more about your proprietary ‘fund-readiness’ evaluation system?

A: Tell us more about your proprietary ‘fund-readiness’ evaluation system?
The “Capital Readiness Report,” or “CRR,” is a process that has proven more than 75% effective in predicting the ultimate success of a venture during its seed, startup, and growth stages. Developed by Blue Moon Advisors in the course of nine years of research closely tracking approximately 300 companies seeking capital, the CRR is a deliverable diligence tool for entrepreneurs and capital providers. A company’s CRR score correlates highly with both the likelihood of receiving funding and with the amount received. Importantly, the CRR also identifies weaknesses in companies not qualified for capital, with a company’s score correlating highly to survivability. Successful ventures are defined as businesses earning a CRR score of 925 or higher (out of a possible 1,000) that later achieve three benchmarks: (1) partial or full funding, (2) remaining in business for a minimum of three years, and (3) repaying lenders or investors through an exit or per original agreement terms.

Q: How exactly do you bridge the gap between companies seeking access to capital and the investment community?

A: The first bridge to cross is ensuring that the client seeking capital is accessing the “Correct” type of capital that matches their stage of development, qualification, and offering. The second bridge to cross is creating the correct documentation that supports the capital. For instance, a venture capitalist, private equity company, angel investor and broker-dealer define four different types of capital. And while they need similar information presented to them, the type of documents, the exit strategy, leverage and rate of return expectations are different. We’ve built a network of capital providers that span 45 different types of business capital. We make it our business to maintain those relationships. When clients earn a score of 925 or better, we introduce our capital providers to those clients utilizing our Managed Virtual Portal (MVP) program. We also host 7-10 road shows and investor presentation events every year. Our next event is in our Las Vegas office on April 12th. So while we are a conduit to numerous types of capital, we are not a broker or agency. We remain independent so that we have no conflicts of interest as they relate to our assessments, valuations and subjective reporting. Here are the real numbers from 2017: 500 referrals to Blue Moon Advisors. We completed 104 Capital Readiness Reports. 13 companies scored above 925. 40 companies received some type of capital. Total in 2017 was $44 Million. That includes private equity, angel capital, venture capital, lines of credit, convertible notes with equity kickers, corporate & Personal debt and equity guarantees.

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Q: What are your plans for the future?

A: We have engaged a software company to scale the CRR process. There will be 20 Million entrepreneurs and companies seeking capital this year; 10 Million of them will need alternative (Non-bank) capital. We need to scale the CRR to serve tens of thousands instead of hundreds. The software will be online this May. Today we have 150+ investors; we intend to grow that number to beyond 400 in the next 12 months, and build from there. We are specifically marketing to UHNW individuals (Ultra-High-Net-Worth) and family offices because they appreciate our services more than most. UHNW is defined as liquid assets above $30 Million. UHNW individuals and family offices will often budget 5-10% of their portfolios to alternative financing so that they can leverage their other investments with higher than-normal returns. We will grow our network and business by working closely with them. We are also scaling by adding regional offices. In April 2018 we are officially opening our most recent addition in the southern financial district of San Francisco located at 649 Mission Street (fifth Floor). Ultimately, I intend to take Blue Moon Advisors public.