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Business Finance with Equity Finance

It is said that nearly 61% of businesses are launched with private capital or capital invested into their business by family and friends but investment does not have to stop only with your family and friends, which is why Equity Finance is there.

Equity finance is cash invested into your business in return for your business share. This cash investment does not need to be repaid and has no interest attached to them. Equity finance is a true risk capital because there is no guarantee that investors will get their money back at all and this investment is not associated with assets that can be removed from your business if it fails.

The way investors get profit from their investment is the fact that they have a part in your business. For this it means that investors get the money produced either through the sale of shares as soon as the company has grown or through dividends, discretion payments for shareholders if the business does well.

There are several types of equity finance such as business angels and venture capitalists. Each type of financial equity varies in the amount of money available for investment and the process of completing the agreement.

If your business can support a minimum growth rate of 20%, you are more likely to get equity finance. If you cannot produce a growth rate of at least 20% in your business then you cannot obtain equity finance. This is an idea of ​​control and higher return prospects if your business is successful that attracts people to invest in your business

But unfortunately many people are still very reluctant to seek equity financial assistance when they see that idea as ‘releasing control’ their business. Many small businesses are very reluctant if their business is growing rapidly. As a business owner, you have to ask yourself the following questions below make decisions about choosing to use equity finance:

o Are you ready to give up your business share and some control?

o Are you and your management team confident in business and products and services offered?

o Does your business have a unique selling point?

o Do you have a drive to grow your business?

o What industry experience and knowledge have your management team?

You also have to consider the following in terms of obtaining equity finance:

o How many funds do you need?

o How many controls do you expect to be maintained?

o How long do you need your fund?

Every business must investigate the option that is open to them when it comes to finance. Equity finance is medium-term finance to length and is a perfect type of financial that is open for small businesses, especially if you are an entrepreneurial business. Entrepreneurship business is private equity investors especially interested. This is because they have aspirations and high growth potential.

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