Equity finance is the process of raising capital through the sale of shares in your business. Investors are looking for quality businesses or opportunities with a high chance of good returns.
Businesses will often seek equity finance when they are seeking a level of funding that they can’t obtain through traditional debt financing.
Types of funding requirement
Enables significant expansion in well-established businesses.
Used when it is difficult to obtain the full asking price of the business through debt alone.
Cash is injected into a business that can no longer service its existing debt - whilst a turnaround strategy is implemented for the business.
Sources of equity finance
Used for start-ups or very young businesses.
Business angels include small networks, syndicates and wealthy individual investors. They will often invest their time and expertise, as well as money into the business.
Finding the right angel - preferably with a background in your sector, can offer far more to your business than funding alone.
Family offices are private companies that provide wealth and investment management for wealthy families. As part of the investment portfolio, they will seek good opportunities to invest in businesses.
Private equity funds
These are funds that specialise in investing in private companies and can often provide a mixture of equity investment and debt. They’ll often focus on certain sectors and will have in-house representatives that will join the company’s board.