Finding the right company to bank with is not easy. The growth capital market is ever-changing. Many resources can be difficult to keep up, from private equity money to hedge fund investments. To make sure you invest in a company that is right for you, you must do your homework. Below are strategies for finding the best growth capital options that fit your investment strategy and risk tolerance.
Find a Company That Will Fill Gaps and Build off Your Company’s Strengths
According to veterans like Peter Comisar, when finding growth capital, one of the main questions you should be asking yourself is if the company will help fill any voids in your business. The company should provide access to new markets or resources you have missed so far. If you are already successful in your space but could use some extra capital for expansion purposes, make sure the company is invested in taking your business to the next level with new products and services.
Establish a Track Record With the Company’s Management Team
When you are looking for growth capital, it is always better to bank with a company that has a proven track record of success. Look at the growth mechanism and see how it fits your model. It might be wise to find companies that offer long-term growth opportunities while providing accelerated access to cash if you are starting in a new industry. Suppose you are already operating in another sector or industry. In that case, however, there might be a trade-off between gaining capital growth or allowing yourself access to new markets that could allow for faster market penetration.
Only Consider Lending That Is Arm’s-Length, Not Embedded
When looking for growth capital, the last thing you want to do is find a lender who will take over your business and your decision-making. The definition of arm’s-length refers to transactions in which the lender has its interest in the company being financed. In other words, if you are looking into bank financing or private equity loans, make sure you are funding your business monitor employees working from home with small amounts that will allow you to become successful without taking over full control.
Focus On a Company That Will Help You Reach Your Long-Term Goals
One of the most important things to consider when looking at different growth capital companies is how they will fit into your long-term strategy. When you are thinking about getting funding, make sure you do it for the right reasons, not just for the money alone. You want to get into a partnership with someone who shares your vision and is interested in helping you succeed in reaching your goals. The last thing you want to do is tie yourself to a company that will not have your best interests at heart.
Many factors can impact a startup’s success. However, nothing is as important as finding the right capital to fuel growth. Startups need capital to buy new equipment, expand their staff size and hire talent, take advantage of new opportunities in the market or pivot, and support the long-term vision. The strategies above will ensure you have a successful outcome in finding the ideal growth capital for your business.