Globalisation on pause? How scaleups can navigate today's uncertainty9:30 am - 10:30 am
Minority vs. majority investment: Choosing the right option
If you’ve chosen to seek equity funding for your business, you must decide whether to choose minority investment or majority investment. Both models of funding have their benefits, but the best option for you will depend on your plans for the business. Important factors include what you intend to use the funding for, your long-term goals for the business, your personal goals, and what you want the leadership structure to look like. It’s vital to take time to consider the right option.
A minority investor delivers funding in exchange for a stake of less than half of your business. A minority investor is by nature a non-controlling partner. That typically means the existing founders or management team keep control of key decisions. BGF provides investment to help businesses grow, and we believe minority investment is the best way to do this, because it allows management teams to navigate their own path to growth.
Minority growth funding
Minority growth capital is for the express purpose of scaling up a business. Most of the funding will go directly to the company’s balance sheet to stimulate growth. Common growth strategies include investing in more assets (e.g. property or stock), expanding operationally (e.g. scaling up recruitment or moving into new territories), executing an M&A buy and build strategy, or developing new products.
Minority growth capital may be right for you if:
- You have ambitious plans to grow the business that require capital.
- You want to scale up your business without incurring debt.
- You want a non-controlling investment partner that won’t be able to overrule you on key decisions.
- You want to retain control over when and how to exit your business, whether that be by selling it to another company, another investor, or listing on a stock exchange.
Majority investment involves an investor buying more than half of a company in exchange for funding. Majority investors are often controlling shareholders. They may be able to exercise control over the company’s finances or operations, potentially overruling the views of the company’s management team in cases where views are misaligned and of course they may be completely aligned. Indeed, a majority investor may agree to preserve a business owner’s voting rights or vetoes over certain issues as part of the deal. It all depends on the nature of the agreement, which is why it is important to seek advice before giving up a share of your business.
A majority investment could be the right choice for your business if:
- You need a larger amount of funding than could be provided by a minority investor.
- You’re looking to scale back your involvement in the company over the coming years and are happy to let another party have control over key decisions.
- You want to step back from the business while maintaining a minority of shares in order to benefit from a future sale of the company.
BGF’s minority funding model empowers business owners to scale up quickly
BGF is committed to providing only minority funding, which we offer to a range of businesses including early-stage, scale-up and quoted companies. As the most active growth investor in the world, we serve entrepreneurs who want to stay in control of their businesses as they grow. We invest with conviction, and we empower business owners to achieve their growth goals the way they want to.
We operate a truly regionalised investment model, with 16 investment teams across the UK and Ireland. Wherever your business is based, BGF’s local investors are nearby to help you realise your ambitions. We typically provide between £1-15 million of initial funding, with the opportunity for significant follow-on funding.
As well as capital, BGF investee business get access to our Talent Network – a group of more than 6,000 board-level non-executives. Our Talent Network has introduced hundreds of portfolio businesses to their non-executive chairs and directors. The Talent Network can also connect businesses with experts on an interim or consultancy basis, a service we call Expertise on Demand. This service has helped many portfolio businesses with specific projects or problems.
Our track record speaks for itself. We have invested more than £2.5 billion in over 400 businesses in the UK and Ireland, and over 100 of our portfolio businesses have achieved exits. The timelines for these exits were determined by the management teams rather than dictated by us. We do not impose drag rights on our new investee businesses, and we always work to the schedules that suit our businesses.
Business funding insights
A post-exit perspective—with Leigh Howarth, CEO of STATS Group
In August, we announced the successful exit of our investment in STATS Group, an Aberdeen-based pipeline technology specialist for the global energy…
Gujarati Diwali and New Year’s celebrations
Pratish Patel joined BGF’s Portfolio Finance team in Birmingham in 2017. Here, Pratish shares the history of Diwali and how…