Are you a business owner hungry for growth and with a vision for the future?
Do you constantly seek different financing opportunities to fund the expansion of your business?
Scrolling around, you've likely heard the term "growth capital."
But what exactly is it, and how does it differ from other forms of financing?
In this blog post, we'll dive into the world of growth capital, exploring its many forms and the best growth capital solutions.
Whether you're a seasoned investor or a curious start-up entrepreneur, read on to learn more about this essential tool for business growth and determine if this is the right solution.
In essence, growth capital is a form of funding businesses can use to support their expansion and growth plans.
Usually, established businesses looking to achieve long-term strategic growth objectives seek it out.
However, growth capital can also benefit small and medium-sized enterprises that aspire to scale up their operations.
From lines of credit to term loans, mezzanine loans to preferred equity, growth capital can take many forms, and you can customize it to suit the specific needs of your business.
So, what are the best growth capital solutions for your business in 2023?
The answer depends on many factors, such as your creditworthiness, debt capacity, and growth plan.
Let's review them below.
Funding/Loan amount: £0.5 million to £5 million
Funding/ Loan duration: 2-5 years
Type of funding: Debt financing
If you're in the market for growth capital financing, Santander can offer you a solution.
Their growth capital loans typically range from £0.5 million to £5 million, and you can use them in conjunction with other senior debt facilities.
In most cases, these loans have a repayment period of 2-5 years, and you need to repay it either at the end of the term or through refinancing.
With flexible financing options and competitive interest rates, Santander Growth Capital loans could be just what your business needs to take the next step in its growth journey.
This type of financing is flexible, and you can use it to support your business's development or fund capital expenditures, making it an attractive option for those looking to expand.
Applying for Growth capital is typically quicker and less expensive than pursuing equity funding, with due diligence being a less rigorous process.
To qualify, you must demonstrate a compelling growth story, typically a combination of increased turnover, profits, and employee numbers.
For your funding request to be approved, connecting it to your company's growth objectives is essential. For example:
Funding/Loan amount: €500,000 to €10 million
Funding/Loan duration: Depending on the company
Type of funding: Venture capital, equity-based
Global Founders Capital (GFC) is a venture capital firm that invests in early-stage and growth-stage start-ups worldwide.
GFC has a global investment approach that focuses on investing in innovative and disruptive companies across various sectors, including retail, internet, media, communication, financial software, and information technology.
GFC has a particular interest in businesses that have the potential to scale rapidly and become leaders in their respective markets.
In addition to getting capital, you can enjoy support and guidance, including strategic advice, operational assistance, and access to its extensive network of contacts.
The company usually invests between €500,000 to €10 million.
Also, you should note that GFC has a reputation for being highly selective in their investment decisions and for taking a long-term view of their portfolio companies' growth potential.
Global Founders Capital invests in start-ups with a long-term growth perspective.
They typically invest in early-stage start-ups but are also interested in funding growth-stage companies.
Their financing model is equity-based, which means they provide capital in exchange for a percentage ownership stake in the company.
First, you must fill out an online application, providing details about your business and team. Then, if you meet the eligibility criteria, Global Founders Capital will set up a meeting to discuss the business and determine if there's a good fit.
GFC typically invests alongside other investors, such as angel investors, venture capital firms, or other strategic partners.
Global Founders Capital does not have a specific eligibility criteria listed on its website.
Still, they typically invest in companies that have:
However, it's important to note that each investment is evaluated case by case.
Still, GFC may consider companies failing to meet the above criteria if they believe in the business's potential.
Funding amount: Depending on the company
Funding duration: Depending on the company
Type of funding: Private equity
Panmure Gordon is a UK-based investment bank that provides a full range of services to the UK, Europe, and the US.
Growth Capital Solutions provides comprehensive support to businesses throughout the private funding process, from initial engagement to post-fundraising activities.
Also, they offer expert advice and consistent interaction to ensure you receive the necessary resources and attention.
The focus is primarily on venture and growth equity capital raises for innovative businesses that address real-world problems across various stages of growth, from early to late stage.
Panmure Gordon provides guidance and assistance to help clients prepare for fundraising by refining their equity story and pitching to investors.
Then, Panmure Gordon connects investment opportunities with suitable private company investors, such as venture capital, private equity, corporate venture capital, institutional crossover funds, and sovereign wealth funds, at the appropriate time.
Panmore Gordon offers funding to UK small and mid-cap corporations and investment companies.
Further information is available upon request.
Funding/Loan amount: £1m and £20 million
Funding/Loan duration: Depending on the company
Type of funding: Equity funding
BGF is a leading equity capital investor in growing businesses in the UK and Ireland, supporting entrepreneurs and innovators.
The company's approach is based on a distinctive blend of several factors, including its size, long-term funding, minority investments, the broad range of coverage, and a simplified investment process.
BGF typically takes an equity share of 10-40% in the companies it invests in.
However, despite the investment, the company retains control as BGF takes on the role of a junior partner, working alongside management teams and existing shareholders.
BGF acts as a long-term business partner, initially investing between £1m and £20m and providing significant follow-on funding as required.
Additionally, they do not set any exit deadlines or have drag rights.
Their funding is flexible, offering a mix of equity and loan notes for growth and cash out to existing shareholders.
BGF can also invest alongside bank debt and co-invest with other partners.
BGF invests in a range of companies, from earlier-stage SMEs with £1m revenues to those with £100m+ revenues, and across all sectors, from ecommerce, media, and food to waste management.
Further requirements are upon application.
Funding/Loan amount: Up to $20 million
Funding/Loan duration: No fixed repayment date
Type of funding: Venture funding, fee-based
Clearco is a venture capital company that distinguishes itself from others by offering businesses financing in exchange for a fee instead of equity participation.
In addition, unlike traditional lenders, Clearco does not conduct credit checks when evaluating small businesses and start-ups for funding.
Instead, they base their approval on other factors, such as advertising performance and revenue.
Thus, Clearco is an attractive option for those seeking funding without sacrificing equity.
You should note that Clearco's services are limited to specific industries:
Additionally, how you will use the funds will impact the cost of the loan.
Clearco offers two financing options to its clients, ClearCapital and ClearRunway, in addition to providing a platform for business guidance, investor access, and other technology start-up resources.
Once you register and submit business details, Clearco assesses to determine which financing program is most suitable for your business and the funding capacity.
The application process requires submitting bank details, including account and routing numbers, along with basic business information such as the EIN, details about all officers and directors, articles of incorporation, and state-issued ID.
Clearco has specific eligibility requirements for companies seeking funding:
Growth capital provides a significant injection of funds you can use to finance various expansion initiatives, such as entering new markets, developing new products or services, or scaling operations. It enables businesses to pursue growth opportunities that would otherwise be out of reach.
Growth capital providers often bring more than just financial resources to the table. They can offer valuable industry expertise, strategic guidance, and an extensive network of contacts.
This support can help accelerate growth and open doors to new opportunities, partnerships, and potential customers.
One of the primary concerns associated with growth capital is the relatively high cost of capital. Interest rates and fees can significantly impact the financial burden on businesses.
Securing growth capital typically involves complex negotiations. It can be lengthy and resource-intensive, especially for start-ups and small businesses with limited connections and financial resources.
Engaging in extensive discussions and due diligence with potential investors can divert valuable time and energy from day-to-day operations.
Growth capital providers are primarily interested in companies promising rapid expansion. As a result, company leaders may feel compelled to prioritize short-term gains over long-term sustainability. This pressure can create a challenging dynamic where decisions are driven by meeting growth targets rather than focusing on the overall health and viability of the business.
Raising growth capital can be a powerful tool for companies with ambitious growth plans. It can provide financial resources, expertise, and network connections to propel expansion efforts. However, it's crucial to consider the potential drawbacks.
One thing you should be aware of is the biggest con of venture and equity funding: dilution.
It means you are giving part of your equity to the third party, and you no longer have the last say in business decisions.
This type of financing is beneficial for ecommerce businesses with a significant amount of inventory and need to free up cash flow to cover expenses, invest in new products, hire new employees, launch marketing campaigns, etc.
The process involves an AI-based evaluation of your products that will determine the maximum amount you can get based on the value of the assets, typically from €10.000-2.500.000.
The loan is then structured with a repayment schedule that aligns with the business's cash flow.
Myos is created explicitly for ecommerce business owners. Thus, you can choose between the two most popular financing options:
1. Purchase financing – To help businesses grow and remain flexible, ordering more, selling more, and avoiding stock shortages have become effortless. The manufacturer's order placement process remains the same, while Myos manages deposit or balance payments.
2. Stock financing – Instead of solely relying on credit history, Myos uses artificial intelligence to assess product popularity in marketplaces to determine eligibility for financing. Since Myos only uses a portion of the inventory as collateral, it eliminates the need for personal guarantees.
No matter which option you choose, you can enjoy the following benefits:
So unlock the full potential of your inventory and take your business to new heights with our asset-based financing solutions.
Apply now to get the working capital you need to accelerate your growth, increase sales, and stay competitive in the market.