Education

What is Growth Equity?

What is growth equity?

‘Growth Equity’, also known as expansion capital or growth capital, is a type of investment in relatively mature companies that are undergoing transformational events in their lifecycles, without a change in control of the business.

Why might an enterprise want growth equity?

When considering the funding spectrum for growing enterprises, most people only think about venture capital and private equity funding. Venture capital provides funding for markets and business models that aren’t yet proven, while private equity funding is typically deployed to acquire entire companies that are often more mature.

What about companies that have proven business models but do not want to give up control of their businesses?

That’s where growth equity comes in!

Growth equity sits at the intersection of private equity and venture capital. It provides companies that have proven business models with capital to fund major transformational company events while taking only a minority stake in the business.

Enterprises seeking growth equity must be revenue generating and profitable (or have line of sight to profitability) but might just be unable to generate sufficient cashflow to fund a major project.

Some of the potential reasons that external capital may be required include:

  • Investment for product development.
  • Resources such as infrastructure, staffing or technology to support an existing or new business model.
  • Expansion of an enterprise into new market segments or locations.
  • Driving scale and accelerating a growth plan.

What does a minority stake or investment mean for your enterprise?

In return for growth equity, investors will receive a minority stake or minority interest in your enterprise. As an investor, Beckon will seek to take a minority stake of between 20-40% in your business, but this does not mean that we will have control or majority ownership of your business.

However, growth equity is much more than just capital, it will also provide you with a partner!

Beckon’s proposition to our investees is that we will be a close and long-term partner to your business. We will provide you access to a supporting network, additional expertise, data and insights and much more to help you reach your goals.

If we have equity in your business we will have ‘skin-in-the-game' and your successes will be our successes.