2. Investment finance
Investment finance (also known as equity finance) involves selling part of your business (‘shares’) to an investor. The investor will take a share of any profits or losses that the company makes.
- investors can bring new skills and opportunities to the business, eg marketing or exporting overseas
- you won’t have to pay any interest, or repay a loan
- you share the risks of the business with your investors
- it can be a demanding, expensive and time-consuming process
- you’ll own a smaller share of your business (although your share could eventually be worth more money if your business succeeds)
- you may have to consult your investors before making certain management decisions
- only limited companies can sell shares, so you can’t raise money in this way if you’re a sole trader or in a partnership
You should get professional advice about business finance.
Tax relief to investors
Some government schemes help companies raise investment finance by offering tax relief to investors:
You can look for either: