You can get long-term funding for your business in exchange for a share in your business. This is called venture capital funding and is mainly used by new businesses and start-ups with high growth potential.
There are four main types of private equity funds:
- Independent funds
- Captive funds
- Semi-captive funds
- Public sector funds
There are different types of investment available depending on the development stage of your business. Depending on which type of funding you need, the investors may become involved with your business. For example, with start-up financing the venture capital investors may help you bring your product to market.
There are pros and cons with using venture capital. The advantages include not having repayments or interest. You will also retain control of your business. The disadvantages include needing to give up a share of your business. It can also be time-consuming to find a suitable venture capital investor.
You will also need to prepare your business before looking into venture capital funding. This includes making your business plan up-to-date and taking steps to make your business 'investment ready'.