The sources of capital that are available to you as a business owner and entrepreneur are dependent on the stage of your business and can be affected by everything from your industry to the age of the company. Set out below are a few of the major categories of capital sources that you may have the ability to utilize in order to meet your business goals.
Commercial Banks
Commercial banks are the most commonly thought of source of financing for a business. Banks generally have multiple products which can suit a variety of needs. Some of these products can include:
- Loans secured with property held by the business
- Loans based on cash flows of the business without security
- Loans guaranteed by the owner or with security of the owner rather than business assets
The availability of each of these will be business dependent and also dependent on the particular commercial bank that you choose to approach.
Angel Investors and Angel Networks
Angel investors are those individuals who have accumulated personal wealth and choose to invest in start-up or early stage companies that have the potential for significant growth. In exchange for capital, angel investors look for either equity in the subject company or convertible debt in return. In most cases, the Angel or the Angel Network will also provide mentorship to the company in hopes of generating an increased return for themselves and the business owner.
Venture Capital and Private Equity Funds
Venture capital and private equity funds are pooled capital from many sophisticated investors. These funds have various sets of investment criteria, but usually these funds are looking to invest in companies from the seed capital stage to emerging growth stage. These funds often look to take an equity stake in the subject company to various degrees and also look to have a certain amount of control over the operations of that company.
Initial Public Offering
An Initial Public Offering allows a company to obtain capital directly from public investors, potentially from all over the world. This type of financing does come with a relatively onerous regulatory burden with respect to financial reporting and performance expectations of investors.
How can we help?
SVG Capital Group is a firm of market driven transaction advisors focused exclusively on the purchase and sale of mid-market businesses and the raising of debt and equity capital. With over 50 years of combined experience, our success is based upon maintaining an extensive network of contacts and potential buyers across Canada, the United States and around the world.