Equity

Sourcing equity for a new or small business could prove to be really difficult, especially since the banks are tightening their belts.

Perhaps the only solution would be equity funding. Non-professional investors such as family, employees or friends often become equity partners. Venture Capitalists could also become equity partners when the small or new enterprise is looking for funding.

Equity funding, or financing, is trading a portion of the business for a specific sum of money, enabling the business to gain the capital needed, without sinking further into debt.

To show willingness to outside investors, the owner of the business would also be expected to invest monies of his or her own, but the primary source of equity is usually through the generosity of friends or family.

If this is not the case, though, and there is no-one that the business owner knows who could invest, then another option would be to approach a company that would be willing to invest in the small or medium enterprise.

Boost Private Equity is one such company that invests in small businesses, ranging from, 5 to 1, 5 million Euros, targeting attractive small business models that are older than 18 months. The business must also have shareholder equity involvement.

How then, would one proceed further to prove to the lending company that the investment would be a viable and attractive one with potential growth?

First and foremost – a business plan should be drawn up.

A due diligence report would be made on the investment; this is a lengthy and extremely thorough process – most investment deals that are made require a due diligence period.

The due diligence period usually takes from one month to three months.

Only once the equity company is satisfied that the business is a good investment is a loan approved.

Boost has offices both in Europe and in South Africa, and is always on the look out for new ventures that are both attractive and lucrative.

With many years of experience and expertise, Boost assists in the management of the small business, helping it to develop and grow into a larger, substantial business.

Should you require equity for your small or new business, and are unable to source the funding, contact Boost Equity today.