As opposed to startups or early stage companies with little to no revenues, there is a vast market for raising growth capital. This market is buoyed by the explosion of non-traditional capital sources. These include institutional credit funds, commercial finance companies, private equity, insurance firms, mezzanine funds, specific industry funds (e.g. healthcare), and family offices. Complicating the marketplace of numerous types of funders and terms are new forms of lending. For example, some groups will secure the debt with intellectual property (IP). Others receive repayments based on percentage levels of revenues.
So, you ask, how does a firm seeking growth capital start and complete the process? Interview and hire the most appropriate investment bank. The best choice is a FINRA Broker-Dealer, who has the requisite experience in finding and securing the most viable investor sources, and is the best fit with your needs.
Below are some advantages to using investment banking services.
- They have relationships with various capital sources and professional service providers who know the sources.
- They know how to layer the various providers of debt and equity, so that each of the interests is protected and comfortable with the deal.
- They will provide realistic valuations at different stages along with "telling" the right story, so that investors are intrigued and serious about the deal terms.
- They will consider how the investor can be a strategic ally, possibly adding gravitas to the Board of Directors. Often, the strategic investor can open up the opportunity to another realm or higher level of other investors.