Equity financing is one of the most taxing parts of starting and owning a business. With all the time and money that has already been put into your operation, venturing into equity financing can seem a bit intimidating. At the end of the day, you and your business need additional funding and finding the right investor will be your most important task. Equity financing comes in many shapes and sizes. Knowing the facts about what each option offers is essential for your own financing success.
Venture Capital – If you have a big idea then you have likely heard of using a venture capital for equity financing. This involves using an investor who expects to see quick returns on their investment. Venture capitalism can be tricky; be sure to read the fine print and watch for any weaknesses in your investor that may influence your project for the good or bad.
Franchising – This is the process of selling off the rights to expand your company to another party. The franchisor will charge an initial fee for start-up services, equipment and lease fees to the franchisee as well as a portion of the royalties from that business.
Angel Investors – Private investors are often referred to as angels. These are professionals who continually seek new investment opportunities to help expand their portfolios. While similar to venture capitalists, angel investors do offer some distinct differences such as being less demanding. They will, however, want fast results and a lucrative return on their investments into your company. If things go well with an angel investor, they are likely to continue to fund other areas of your business and help with expansion.
There are other equity financing options available as well but most are geared towards companies that have been in business for a period of time and are set to experience substantial growth in the future. You can learn more about different options and available investors and lenders by contacting Private Capital Mortgage at 403.252.7882.
Equity financing will help make or break your dreams of owning a successful business. When you are using other peoples money, it is important to spend carefully to avoid any unwanted fees or expenses into the future of your growing business project.