Grow a Business - Funding
If your business is growing rapidly, entering new markets, launching new products, or buying a business you will probably need to finance it with a combination of debt and equity.
A bank loan
The bank you already use is a logical place to go to raise capital. There are many different types of loans which may suit your needs. Consider one or a combination of Westpac's award winning finance solutions to suit your business needs.
Equity finance
Sometimes, raising start-up capital requires "giving up" a portion of your business to private investors. This is called equity financing and involves dividing your business ownership among investors who contribute capital, but who may or may not participate in the day-to-day business operations.
There are no loans associated with equity financing and there's no legal obligation on you to pay back the amount invested. All the investor gets for his/her money is a percentage of the business and the losses and profits associated with it. This may seem ideal, but remember you are giving up a portion of your business and with it some control. Negotiate the best possible package for yourself.
You need to have prepared a business plan that shows there is a market for your product or service, how you will produce it, how you will deliver it, the ability of the people involved to do so and the risks associated with the business.
The business plan should also identify the type of investor required, the amount and purpose of the funds raised, the value of the company and what the investor will get.
Venture or development capital companies, innovation investment funds or pooled development funds
These firms generally only inject more than $2 million into a business. Most have guidelines on what they can or cannot invest in. You should research these firms through the Australian Venture Capital Guide, an annual publication listing the majority of these firms and their criteria.
Visit the Australian Venture Capital Association Limited for more information.
Public raisings
It generally costs more than $500,000 to list your company on the Australian Stock Exchange. You should be needing to raise more than $5 million to pursue this option.
