Funding for Growth
21st March 2014
Whether you are an established business or a start-up with ambitious plans, identifying and raising the necessary funding for growth can be a daunting and time-consuming task for business owners.
The lack of what was commonly perceived as traditional financing from the high street banks over the last few years has undoubtedly had a major impact on many SMEs in terms of their development and growth plans.
However, it has also brought to light to many businesses a host of other “alternative” financing options which they may not have ordinarily considered in the past, such as venture capital investment, angel monies, grants and asset/invoice based lending.
First and foremost, a business seeking funding must do its homework and make sure that any proposed form of finance is right for it, taking into account the stage of the business, its plans for the short to medium term and, crucially, its exit strategy.
Does the business need something more than straight cash?
Would it benefit from the expertise that, for example, VC funding may bring in terms of non-executive guidance and strategic exit planning?
If so, are the owners prepared to give up equity (and in what proportion) in return for this and to accept the inherent restrictions a VC will require over key decision-making going forward? Or is debt funding more appropriate?
What assets might the business utilise in raising debt? Is the cost of servicing the debt manageable?
The North West now boasts a number of financing options for businesses seeking growth.
As advisers to The North West Fund, for example, we have seen numerous companies secure not only the finance but added expertise and guidance that they need to move forward and realise their ambitions.
Finance for growth is not a closed shop. For well prepared and well advised companies, there is an option to suit most requirements.
The key is to identify the most appropriate for the needs of the business both now and in the longer term.
* For more information on the issues raised by this article, please contact Melanie Yeomans.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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