If you need to find some growth capital for your business, your first port of call might be Government grants or loans, or perhaps your bank. However, these are not always the best options, especially if you are looking for larger amounts.
One commonly overlooked funding option is private equity. The world of private equity is often misunderstood, but it is a good way for entrepreneurs to raise some capital. The greatest benefit of private equity is that it can offer capital in larger amounts than a bank would typically finance, and it is often available to businesses that banks may be reluctant to fund.
A Range of Funding Options
Private equity investors are more likely to be willing to look at businesses at a range of different levels, from companies that are just getting started to those that have been trading for a while. In many cases, private equity companies are interested in specific sectors or companies that operate in a specific geographic area, so you have a lot of potential options to choose from. You may also wish to explore peer-to-peer lending networks, one of the more recent developments in private equity.
Many potential investors rely on private equity software to assess the viability of those businesses. If you understand what the private equity companies are looking for and how they segment markets and assess the value of companies, you can use this to your advantage and attract interest from more potential investors. Remember that investors are looking for equity in your business, and when you give them a share you will be diluting the share to which you and your existing shareholders or investors have access. It is a good idea to wait until your business is already up and running, if possible, and to ask for small amounts of funding as and when you need them. This ensures that you keep as much equity in your business as possible.
For potential investors, using private equity CRM can provide some valuable insights into a business. Most venture capital companies are looking to fund a range of different projects to balance risk if one or more of the businesses fails. However, keeping track of all of those companies is not easy, and that is what private equity software aims to help with. It also helps the investors to profile firms in a range of sectors.
Seeking an Investor
If you are considering working with a venture capitalist, an angel or some other form of private equity company, do make sure you are realistic about the potential for growth of your business and that you understand what you are giving away to them. Private equity firms often operate on cycles; they will want to make sure that you can offer a return on investment in a timely fashion. Companies, such as Selby Associates, will invest in the business for a fixed time period, and they will want to be as certain as possible that they will get their money back before they exit the business.