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Equity, Equity, Equity

Last week on the “Finance Hub” administered by British Business Bank (BBB), there was a piece very much in keeping with one of the key strands of this year’s ‘Finance in Cornwall’ event – five benefits of equity finance for growing businesses.

I summarise the content below:

Background

The number of UK equity investment deals is ‘steadily’ rising each year, according to Beauhurst, a searchable database of the UK’s fastest-growing start-ups and scale-ups.

In total, 2017 equity investment deals were up on 2016, with the amount of cash invested also growing by 113% over the same period.

Businesses can position themselves on this simple scale to understand where they might fit in:

  • Angel Investment – invest £15k-£2m in early stage companies
  • Venture Capital – invest £2m-£20m in early stage companies
  • Expansion Capital – invest £5m-£100m in profitable and growing companies
  • Private Equity – invest £10m-£50m in profitable, mature companies
  • IPO – a platform for unlimited equity capital raises from £5m to over £1bn

British Business Bank’s Top Tips

Top tips included in the article are as follows:

  1. Use the BBB tool to get a clearer idea of what options could work for your business (See further below)
  2. Always do your research on an investor. Find out what they can offer and make sure that matches your business’ needs
  3. Get comfortable with the amount of your business you want to sell to an investor. Too much and you won’t be in control; too little and the investor is not incentivised.
  4. Keep customer letters and testimonials, speak to experts who could become champions and don’t be afraid to network, run workshops and raise your profile
  5. Have conversations about how many funding rounds your investor is prepared to support. Make sure your expectations are aligned before you sign term sheets.

The use of the BBB tool can be replaced by, or supplemented to, by consulting with advisors – such as PKF Francis Clark…

There is also our Truro office breakfast briefing taking place on 2 July 2019, on the theme of ‘Equity is not just for Punks: practicalities and principles’.

If you have any questions on equity and specifically on how PKF Francis Clark can work with you on an equity fund raise, please contact me in the first instance.

FEATURING: Richard Wadman
Richard qualified as a Chartered Accountant with KPMG in 1993. Since 2006 he has worked in Corporate Finance, firstly with the predecessor firm in Truro… read more
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