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Venture Capital is equity finance. It allows you to raise capital by selling part of your business and can provide a solution for startups and new businesses in need of cash. It could bring you the funds you need, but it also has some serious drawbacks.
The worst is that you could lose control of your company. Venture Capital investment means that in exchange for cash, an individual or corporate investor takes a share in your company.
If being your own boss is one of your key reasons for starting the business, you may want to look at the alternatives.
At Rangewell, we can introduce you to alternatives to Venture Capital investment which could help you stay in control.
There are several other funding sources that you should consider.
Traditional bank loans may be difficult to secure, but there is a wide range of other lenders who can provide cash loans. Some may require security and often require a personal guarantee, but it is often possible to structure a loan with repayments that meet your business needs.
Venture Debt typically is backed by assets of the business, while Mezzanine Debt is often a high-interest rate debt that may be convertible to equity in some business scenarios.
It may be possible to structure a Commercial Mortgage to provide funds for buying a property or a business, or to use existing property assets to release funds for any business purpose.
Asset Finance is, basically, a loan to buy equipment and can be a relatively low-cost way to borrow as the equipment itself provides security for the loan. Asset Refinance can allow you to raise money by selling assets to the loan company, and repurchasing them with a Hire Purchase or similar agreement. You can continue to use the asset while it acts as security for the loan you need.
Invoice Factoring could allow you to get an advance on your invoices it can be arranged quickly, in a fraction of the time it takes to arrange Venture Capital support.
Remember, Venture Capital funding does not have to be repaid as it is an ‘equity’ investment, or a stake in your business, while alternatives that involve lending do. The cost of business lending has always tended to be higher than that for personal loans.
It is important to have a complete understanding of the costs involved before finalising your business plans. At Rangewell, we can help you understand the costs of various options to help you make clear financial plans.
There are several alternatives to Venture Capital that you may want to consider, but you may face a major challenge.
As you are starting up your business you will have you have no trading history or accounts to demonstrate that your business will be able to repay a loan.
Fortunately, at Rangewell, we know that the lenders who can provide the funding you need to get your startup business off the ground, and how to approach them for the funds you need.
As business finance experts, we understand the challenges you face and the options that are open to you. We also know the lenders who share our enthusiasm, who are most likely to help with new business plans, and who can offer the most competitive rates for all types of finance.
Coming to Rangewell means getting our expert team working for you and your new business.
We want your launch to succeed - and we want our financial expertise to provide an important asset for your future. We can discuss your objectives, and help find answers scaled to fit your business as it grows. When you call us, we can explain the options – and find you the solutions you need fast.
At Rangewell, we help all types of business find all types of finance, and we can find the most suitable providers for your new business. Call us to discuss your startup plans.
Find funding to allow a new business to acquire premises
Help find the most competitive funding to help a startup acquire a van
Source a professional loan for an accountant ready to start a practice
Find the most competitive lender for equipment and spread the cost with HP
Help arrange ‘jigsaw’ funding for all aspects of a startup
Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.
What kinds of lending are there?
What are the costs of Alternative Lending?
What are choices do I have?
Why type of funding is best for my business?
What are the restrictions?
The downsides of borrowing
Paperwork you need to provide with your application
Key terms to check
Have a question?
Venture Capital firms provide a professional investment facility. They raise money from Insurance Companies, Pension Funds and wealthy Individuals. They use this money to fund an investment portfolio with asset classes such as stocks, bonds, property and business clients.
Venture capitalists make money by investing in a start-up or scale-up company, and take a share of the company. When the company is sold to a larger company or begins to sell shares through the stock market the venture capital fund sells its shares, for more money than it originally paid.
There are many ways to fund a start-up company. A Venture Capitalist may be one source of funding, but may not be suitbale for all types of business. If you have a start-up plan, you can find out more about the ways to fund it by talking to a funding expert.
If taking on more debt is not financially viable, a company can raise equity capital by selling a share of itself to an investor. Because the investor owns a portion of the business, he or she takes a share of the profits and there is no loan to pay interest on.
