Seeking growth capital is not an easy decision for a business owner to make. You know that wherever that capital comes from, it can change the dynamics of ownership and take your business from its comfort zone to uncharted waters.
Nevertheless, growth capital is usually necessary at some point in the lifespan of a business. In the following article, we’ll be giving you the keys to obtaining it in a wise and efficient manner. First, however, there are some things to know:
Before You Grow
Defining good growth capital isn’t always cut-and-dry. Wherever that money comes from, there could be some form of string attached.
It’s important to understand that as you reach out to potential investors or other funding sources. Here are some tips to consider as you begin your search and the decision-making process.
1. Invest Personally
Before turning to growth capital partners who will likely want a piece of your company in exchange for the cash infusion, know this. You can invest more of your own funds to get over any uncertain humps.
That investment will serve a twofold purpose. One, it will give your business what it needs to continue operations during uncertain times. Two, it will signal to potential investors that you believe enough in your company to fund it with your own money.
It’s always easier to get someone to help you when they see you’re committed. Invest in your company with a clear conscience because it will most certainly come back to you as you seek funding.
2. Determine Stakes
When seeking growth capital services, it might be necessary to offer an ownership stake in your company. Are you okay with that? Take a moment to consider how much ownership stake you’re willing to give up.
Carefully consider this more than you do the money. The more you part with, the less control you could have over the decision-making.
3. Seek Players
There are many growth capital ventures out there. Be prepared to think outside the box and look for support in strategic ways. Working with a firm like Solomon RC Ali can cut the wait time, but you still need to prepare to investigate each potential funding source thoroughly.
4. Choose Best Option
So, what is growth capital to your business? Is it a way to get over a temporary hump, or do you need longer-term growth and guidance? Beyond self-investment, consider the following:
- Angel investors: Individuals or groups specializing in startups. Their support comes in exchange for a percentage of the company or convertible debt.
- Venture capitalists: These investors, like angels, are willing to take on startups, but they also support established companies that are at new stages of growth. They usually do so in exchange for equity, and most tend to look for established growth or the potential for growth in their decisions.
- Banks: Yes, you can borrow the money from a bank to maintain ownership. However, you’ll need to put some skin in the game through collateral and a willingness to pay interest rates regardless of your company’s performance.
Which path you choose to go will depend on your needs and your vision. Finding a balance between the two is vital.
Where to Find Growth Capital
If you’re not sure where to find growth capital, a company like Solomon RC Ali can help. We have CEO experience and can provide the appropriate guidance for whatever part of the decision-making process you’re going through.
Schedule a consultation today!