Season 10 - The second round of fundraising

Episode 6 - July-September 2022 - New roadshow, new goals

Adrien Aumont — Obviously, the infrastructure fund’s refusal to work with us is a hard pill to swallow, but we saw it coming. A month before the final no, we began to move forward with the next step. Indeed, even if the slow response wasted time, the discussions moved us forward. Before, we had no idea that such an arrangement was possible. But now we’re determined to keep following this lead. We know that this kind of funding is unprecedented. There’s no clear path to success, not even a vaguely marked hiking trail, so we have no choice but to try everything seriously and with some optimism.

To reflect, we decide to embark on a new roadshow to present Midnight Trains to other infrastructure funds. As we don’t know this landscape, we decide to seek support from an investment bank to increase our chances of success. First of all, you should know that calling on such advice is part of the industry’s customs. These experts will have several missions. First, they will guide us through this somewhat complex setup, which now consists of an AssetCo and an OpCo. The first carries the assets while the second rents them for its operations. Indeed, many elements of our business plan must be reviewed to fit into this new financial package. Then the investment bank will help us list the right targets and introduce us to a part of the financial world that we still know very little about.

There are two investment banks that particularly attract our attention, and we’re put in contact with the first via one of our future angel investors. He himself recently raised €150 million for the installation of innovative electric car charging technology. However, he raised this through venture capital (VC) funds, infrastructure funds and growth funds. The latter, which we haven’t yet discussed, generally invest in existing companies with activity and turnover. Their objective is to grow them through takeover operations, or by expanding their geographical reach. This fundraising is inspiring because the angel investor was able to bring all these people around the same table for a somewhat extraordinary project. This shows us that it’s possible and that there are projects involving all of them. Better yet, our angel believes it would be possible for Midnight Trains, so he puts us in touch with the investment bank that supported him.

We were then put in touch with a second investment bank from outside Europe by one of our relatives. It has a lot of knowledge about the railway, both on asset issues and on those related to operations. Better yet, it recently had a company file as a new entrant in the railway sector. It’s therefore a second council that can carefully consider the financing of Midnight Trains.

Romain Payet — Unlike some of our previous choices, this one wasn't particularly difficult. And the first of the two investment banks will work to convince us that they’re the right partner. While the second will consider that everything is acquired and therefore won’t make any real effort. Furthermore, the first decides to align its interests with ours: if it cannot raise the funds we need, it will not be paid. The second, on the contrary, asks us to pay monthly fees for security. Only problem is at the time, we had very little available cash, which nudges us to choose the European investment bank rather than the other one.

In September 2022, we’re ready to embark on a new roadshow with a new partner at our side. Almost nine months have passed since we chose the ROSCO. We lost a lot of time by taking the VC route and then waiting for the response from the infrastructure fund. For some of our partners, it’s taking too long. Even if now we have new targets and are supported by experts who know exactly how to tackle them.

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