Rely on yourself. Pull yourself up by your bootstraps. This is good, old-fashioned advice. But it doesn’t always apply to the need that all middle market companies share to finance their growth. Very few companies can finance expansion by internally generated profits alone.

Debt financing has a role to play in most companies’ capital structure. But most companies are not sufficiently “bankable” to fund growth with debt alone. And debt financing increases your fixed costs of doing business significantly. A downturn can make it hard to meet your interest payments or put you out of compliance with your loan covenants. Which can be the end of your business.

Why You Need a Plan to Raise Capital

So—raising equity funding probably must be part of most entrepreneurs’ game plan. This runs the gamut from seed investment from “Friends and Family” to a control investment by a venture capital firm. Whatever kind of equity investment you seek, you need to start to plan for this transition well in advance of actually identifying and talking to potential investors. 

I am giving a webinar on this subject this Wednesday December 11th, at 1pm ET. You can register by clicking here. I will provide pragmatic advice on raising equity capital for your company, such as:

• What kind of investor do you want and can you get?

• How much control of the company are you prepared to give up?

• What can the right “value added” investor provide the company in addition to his cash?

• How does the governance of the company have to change after you have brought in a significant investor?

Please join me for the webinar on Wednesday by clicking here.

About the Expert

Catherine Cates has a diverse background as an executive, advisor and entrepreneur. She has developed strategies for middle market companies, worked with Newport's private equity firms and has significant experience as an entrepreneur. Contact or learn more about Catherine here.

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