From the desk of Edward E. Cambas.

Thanks from the desk of Edward E. Cambas.

From the desk of Edward E. Cambas.

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Offered by Edward E. Cambas.

A common question is, “What type of capital structure is best for my company?” The answer to that question is individually dependent upon your company, its stage of development and its needs. In the broadest sense there a two types of financing, debt financing and equity financing. Let’s take just a minute to consider the broad implications of both.

Debt financing is the infusion of capital by an investor in exchange for an agreement or repayment and interest over a specified period of time. Debt is usually backed by collateral and subject to other restrictions the investor may impose to secure their position. Common examples of debt capital are loans and the issuance of bonds. Debt may be an attractive means of securing capital for your company because you are not required to give up equity in exchange for the infusion.

However, carrying debt on your balance sheet requires that you have sufficient cash flow to make periodic interest payments, projected resources to pay off principal at the time of maturity and collateral necessary for securitization. Debt financing is many times not an option for early stage companies because of lack of positive cash flow. An exception could be debt put in place alongside owner’s cash for the purchase price of hard assets, such as plant equipment or real estate, that’s liquidation price would be sufficient to cover the amount of the loan

Equity financing is the infusion of capital by an investor in exchange for stock in the company. Equity issued to investors in exchange for cash can take many forms such as common stock, preferred stock or warrants. Common equity investments are those made by venture capital funds, angel funds and hedge funds. Whatever the agreement structure, equity investors expect a return in the form of dividends and appreciated stock value at the time of a company sale or public offering.

Equity financing may be attractive because it allows for an infusion of capital into your company without the immediate cash obligations associated with debt service. Additionally, bringing in equity investors means that you’re bringing in new owners and possibly new board members which may a change in the corporate culture. Many times these new owners are experienced businesspeople in their own right and can offer management valuable insight and perspective as your company grows and changes.

While equity financing does not make significant demands on cash flow, except when dividends are paid, it can come at a high price. Equity investors take on a lot of risk when investing in your company at an early state but generally reap handsome returns on their investment at the time of company sale or public offerings.

For more info on this subject as well as more info on getting funding for your start-up go to http://www.capitalmatchpoint.com

Capital Matchpoint.

What is The Capital MatchPoint?

The Capital MatchPoint connects Entrepreneurs and Investors utilizing intelligent web technology to instantly match businesses in need of start up, middle or later stage capital with all types of institutional, professional and accredited funding sources including:

Angel Investors, Private Equity, Hedge Funds, Venture Capital, and find loans from Commercial and Private Banks.

We are your single-stop destination, the point...

The Capital MatchPoint ...where business meets capital.

From the business desk of Edward E. Cambas.

One burning question in the mind of the capital seeker, since the dawn of time has been, how long does it really take to get a funding done? Now, in my 25 years, being on both sides of the fence as a capital provider and also as a capital seeker, I could tell you ultimately, plan on about six months. It could take longer, rarely does it take shorter.
Now, there are eight key steps in the process and being aware of those will help you understand the process and the time.
The first thing that happens, typically, is a review of the business and an evaluation of your financials. This is the point where the capital provider is making a decision on whether they want to interview you and take some further time up for consideration.
Number two, there's going to be a meeting and a presentation. Typically this one is going to be done in person and it is what we call a "dog and pony show." It is where you present your company and parade the merits of it in front of the capital provider. The capital seeker then will find themselves in a due diligence period. Now, this cuts both ways. They're doing due diligence on the capital seeker, our investors want to know, are all the facts there? Is everything in line? Do a little homework, check some facts. You should be doing the same thing as a capital seeker while they are doing there's, know who you are dealing with.
Number four, there is going to be a series of follow up questions, ultimately. You need to be prepared to answer those.
Number five comes; finally a term sheet. This is a first take, or draft, at a letter of intent to provide the funding and it will spell out: what are the terms of the funding, what type of funding equity get, what have you.
And number six, what always follows a term sheet is a negotiation. Because you never, as a capital seeker, want to take the first deal that's put on the table.
Number seven is, after negotiations conclude, typically there is a formal agreement.
And number eight is the closing. So, there are a lot of steps that you go through on the way to being funded. Being aware of those will help you to understand the time that is involved with that.


for more info contact edward cambas at edward@capitalmatchpoint.com