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Growth Capital

Growth Capital

Growth capital are debt facilities provided to established companies seeking to expand, restructure, or enter new markets without diluting their equity. It's aimed at mature businesses with proven models needing funds to grow further. Debt solutions for growth can include term loans and can also take the form, for sponsor backed companies, of venture debt. The goal is to accelerate company growth, and usually to invest in new or rapidly expanding initiatives.

Growth Capital Strategies

Businesses suited for growth capital typically include:

  • Mature Startups: Ready to scale with proven business models and consistent revenue.
  • Market Expansion: Looking to enter new markets or launch new products.
  • Tech Advancement: Needing investment in R&D to stay competitive.
  • Operational Scaling: Requiring funds to increase production capacity or serve more customers.
  • Strategic Acquisitions: Aiming to grow through buying other companies or merging.
  • Prepping for Exit: Seeking to improve valuation before an IPO or sale.

These businesses should use growth capital to fuel significant growth or strategic changes without diluting ownership, provided they have clear plans for using the funds effectively.

The Deal Process

Preparation, preparation, preparation

What is the business plan, does this align with the financial model, how is the cash injection going to grow the business, where will you deploy the cash, what will be the ROI - all needs to be well prepared.

Structure

If you understand the profile of what you need, why you need it and how you will repay the debt, you can start to look at the available structures in the market and then match the financial model with the available structures.

Engagement and offers

Alongside their financial assessments, lenders will want to discuss plans with management and get a feel for the team and the plans. Growth Capital lenders will hopefully be a long term partner, so ‘it’ has to work.

FDD

The lender will deep dive on the financials, properly kicking the tyres to make sure that the model and the plan match the funding.

LDD

Growth capital facilities tend to be long term and bespoke, so getting legals right is imperative.

Funding

Once the deal is done, it is time to get on with growing.

Items to Consider & FAQs

Items to consider:
The growth plans for your business have been well thought out and extensively researched...so the funding strategy that will support this needs to be the same! Given the vast array of different approaches that can be employed, it worth taking the time to talk to a trusted advisor who can lead you through this process and find a solution that is as sophisticated as your expansion plans.

Why use growth Capital?

One of the main motivations for using Growth Capital is to provide your business with the funds it needs to meet your expansion aims without diluting ownership. Additionally the strategies used ensure that the repayment terms are flexible and affordable to align with growth.

What form can this take?

Common strategies include term loans, asset based lending or venture debt (for sponsor backed companies).

Can I access further capital along my growth expansion?

Yes it may well be possible. A lot of lenders like to grow with a business, so if they are confident in the direction of travel and the people running it, they will be happy to consider supporting future expansion plans and opportunities as your business grows. That is why it is important to have a clear plan on how the funds will be used to support growth.

What information is important to have when looking at Growth Capital?

A clear strategy for how the funds will be allocated to support the businesses expansion plans, and financial modelling/forecasting to demonstrate this to lenders. As a full scope debt advisory service, we can assist in the compiling of necessary financial data.

How long does this process place?

We understand that some strategies need to move quickly to capitalise on an opportunity. Short term injections to get your plans moving can be arranged within a couple of weeks, with long term growth capital typically following a 4-8 week process.

Can you give one piece of free advice?

The narrative behind your expansion plans matter, so how you present your financial data and story to lenders matters. That is why it is important to have someone in your corner who has been there and done it many times before.

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FBX Capital Partners Limited is registered in England and Wales. No.13456241. Registered office at 238a Telegraph Road, Heswall, Wirral, England, CH60 0AL.
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