Raising Growth Capital

People often ask whether we help companies raise capital.  Sometimes, the question is asked by an early stage, rapidly growing company, and sometimes by a struggling company grasping for a lifejacket.
 
In neither case do we raise capital by soliciting and assembling investors.  However, we do help arrange financing for acquisitions by introducing buyers and financing sources, (see Find Financing), and routinely refer buyers to a variety of lender types.
 
Growth capital comes in different forms for different companies' applications. 

Start Up Funding

The vast majority of initial funding for startups comes from founders' personal investments, bank loans and credit card debt. A Kauffman Foundation study evaluated nearly 5,000 businesses started in 2004.  The study found that 75% of the funding used in the first year of operation came from those sources. 

Debt Financing

All banks and many other specialty finance companies offer business loans for expansion, working capital, equipment or real estate purchases. 
 
These loans are typically pure debt, as the bank does not take any ownership interest (equity) in the borrower.  This type of debt capital would account for the vast majority of all capital provided to privately held businesses.
 
Alternately, there are financing instruments such as mezzanine financing that may combine elements of debt and equity financing.
 
We are happy to recommend banks and financing sources for our clients who may need these contacts.

Equity Financing

As expected, the Kauffman Foundation study showed that high tech firms were more likely than businesses from other industries to obtain outside equity funding in the first year, e.g. the outside investor takes a percentage of ownership in the company in exchange for the investment. 
 
Equity financing ultimately is the most expensive source of funding, however there are times when it is appropriate or necessary for entrepreneurs to use it.

Angel Capital for Early Stage, High Growth Companies

For the few, early stage companies for which an investment has a reasonable probability of growing the company into an attractive target to be acquired or go public, equity capital resources such as "angel funding" may be available to them.   
 
Feasible applicants for this type of funding would typically have some technological or business process advantage that would change the nature of competition in the market - a "disruptive technology."  They would have significant growth potential, and would almost never be "Main Street" type of companies. 
 
They would be staffed by high-energy, very proficient owners/managers, who can stand in front of a room of highly sophisticated investors who will drill them with questions about why they're asking for money, what they'll do with it, and why an investment in their company would be a better idea than investing elsewhere.
 
Many companies that later receive venture capital received angel funding previously - however a very small percentage of companies stand a chance of ever getting venture capital!
 
While we are not currently licensed to facilitate private placements of capital (this is different from brokering the sale of a privately held company), as a courtesy we are happy to provide resource suggestions since this issue arises with some frequency.
 

Angel Financing Groups

If your company needs seed funding, maybe Angel Finance is appropriate for your growth capital needs. The web sites listed below provide rich information on who should apply, how to apply, etc.  We are not affiliated with any of the listed groups.