Growth capital is suitable for companies that are looking to expand operations, enter new markets or finance an acquisition.
Equity is also called expansion capital or growth capital. It is a type of private equity investment, in companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition.
Businesses that seek growth capital will often do so to finance a key event in their business lifecycle. These companies are likely to be able to generate revenue and profit but unable to generate sufficient cash to fund major expansions, acquisitions or other investments.
Limited companies can sell shares in their business to an investor. The investor in turn will take a share of any profits or losses that the company makes. This can be a good way to fund growth, where you don’t have to make loan repayments and also add new skills and expertise into the business.
Access to growth capital can be key to pursue growth including for example facilitate expansion, sales and marketing initiatives, equipment purchases, and product development.
All interest rates quoted are indicative only as rates will only be confirmed based on the risk profile for each deal. Risk category associated with the deal. This is based on primarily debt survivability and security available for the loan
Advantages of Equity
Access to business expertise. Aside from the financial backing, obtaining growth financing can provide a business with a valuable source of guidance and consultation
Access to additional resources such as legal, tax and human resources
Tapping into your financier’s connections could have tremendous benefits
No need for loan repayments
Things to be aware of…
Loss of control of your business as the size of the stake could determine how much say your investors have in shaping your company’s future direction
Minority ownership status depending on the size of the investors’ stake in your company. which means you could be giving up majority control of your own business
Equity finance is harder to find and a more complex form of financing
You will be selling a stake in your business in exchange for an investment
Detailed plans (a pitch deck) and financial forecasts will be required