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October 7, 2010

Why Equity Capital Is the Right Choice for You

I can’t think of any business that worked and reached incredible success and did not need a major capital infusion at some point, whether to survive or to expand. It is just too hard to manage without money especially in the fluctuating market we now experience.

The real trick is where you get the money you need and what you have to do to get it. Most small businesses go directly to the bank and contract a loan. The illusion is that getting a loan is much easier than being funded and that you don’t give up parts of you company. You may think that getting capital from a funding source is harder because you have to prove that your venture can grow, but you are missing the fact that anywhere you go and ask for money for your business, you will have to do that eventually. Nobody will invest in a company with no future. It’s true, banks are everywhere and they just can’t wait to fund you and cash the huge interest rates they will ask in the end, but even in the venture capital world, things can be as easy or even easier if you just get started with the right list of investors.

There is another conflict here. Venture capitalists will take a piece of your company so if you exit the company through an IPO or a sale you will have to share the proceeds. You may think that is a horrible thing and that you worked a lot for the company and you want it all under your control. Let me tell you this: that mindset will eventually hurt your business more than it will help it. A business without proper financing will not work, as it should. Besides having, a small piece of a big company is much better than having a big piece of a small company that will eventually sink anyway. Sure investors will exert some control of the company but that is just in order to help you create a larger entity and in this process, you will find that the investor’s connections and knowledge will be of immense help. The advice of the investors will not harm the company in any way as it is not in their interest and sometimes the investors will just take a seat on your Board of Directors and let you run the company however, you want.

Equity capital can help your business grow with a limited amount of effort, it is more accessible to early-stage companies than bank loans and they do not include periodic interest payments, which means you, can absolutely focus on growing your business and less on short-term cash flow needs.

If you want it all to be easy, even easier than getting a loan, you have to start right. Click here and check out one of the best venture capital directories on the market that includes thousands of investors and get the equity capital you need in just a matter of days.


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