Every investment is different.
ISHTA Capital follows principles rather than a fixed formula. The typical shape of an investment relationship is set out below — while the exact structure always depends on the circumstances of the business.
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1
We begin by understanding the business
Before discussing valuation or ownership, we seek to understand the promoter, the history of the business, why capital is required, how it currently earns money, its customers and market position, cashflow, liabilities, people, systems, risks and future opportunity. The nature and depth of evaluation depends on the business.
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2
Capital requirement
We do not begin with a predetermined amount that must be invested. We first seek to understand the actual requirement. Capital may be introduced in stages where appropriate rather than all at once.
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3
Minority participation
Our general preference is to invest alongside the existing promoter rather than replace them. Accordingly, minority participation will often be more appropriate than control ownership. The final structure will always depend on:
- Capital requirement
- Current business value
- Risk
- Promoter contribution
- Expected return
- Investment period
- Circumstances of the business
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4
Valuation
We prefer valuation methods grounded in the current economic reality of the business. Future opportunity may be considered, but projections alone should not determine value. The valuation discussion should be understandable to both entrepreneur and investor.
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5
Governance
Investment creates responsibility on both sides. Appropriate governance may include agreed financial reporting, visibility into material business decisions, protection of investor rights, clarity regarding promoter responsibilities, agreed use of investment funds, and periodic review of business performance. Governance should protect the relationship without unnecessarily interfering in everyday operations.
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6
Investment period
We do not believe every investment must follow the same timeline. The appropriate period depends on the business, the purpose of capital and the agreed investment structure. Our preference is to give businesses enough time to use capital productively rather than creating artificial pressure for premature exits.
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7
Buyback and exit
Where practical, the investment structure may include a clearly understood path for the entrepreneur to buy back the investor's interest, or for the investor to exit under mutually agreed conditions. A successful exit should leave the investor fairly rewarded, the entrepreneur stronger, and the business more independent.
ISHTA Capital follows principles. It does not force every business into an identical investment structure.