Sale of equity interest
Fundraising option through equity sales, that is, through the sale of the company’s equity interest. The entry of a partner can provide not only for the business’s financial needs but also for the management shortcomings, especially when the new partner’s knowledge supplements any existing limitation or deficiencies of the current management. And although it requires a lot of discipline from all parties, it presents itself as a good option in the mid/long term, when thinking about business growth.
Bank Credit Lines
Fundraising choice through bank financing, debt notes, anticipating receivables, among others. Its advantage is the preservation of the company’s ownership but it bears the disadvantage of the high interest rates and fees charged by typical financial institutions, which also requires the company to have at least two years of operating history.
Venture capital is a form of private investment where capital is invested into young companies, startups, and small companies in return for long-term growth potential. Venture capital has the characteristic of being provided by wealthy investors, investment banks, and other financial institutions with enough funds available to take greater risks in exchange for greater returns.
It is a modality normally operated by Equity Investment Funds or Stock Funds, which buy and restructure more mature companies that have already reached a certain annual turnover and which are still privately held or not publicly traded on the stock exchange. Investments often occur through leveraged acquisitions, venture capital, capital for growth, investments in stressed companies, and mezzanine financing.
Here, the investment time horizon is usually pre-determined and the Stock Fund acquires part of the company (quotas of the capital stock or shares) with the goal of increasing its market value and eventually selling its share at a future time with a profit. In Brazil, the average investment time ranges from 4 to 7 years.
Development and Grant Programs
Development Agencies are State Institutions whose aim is to financially support research and solutions in science, health, technology, and innovation. Seeking fundraising projects from such institutions may be handled directly by the entrepreneur, and it is in his ability to manage each stage of the process until its proper conclusion.
Hiring companies specialized in this type of intermediation gives the entrepreneur more speed, efficiency, and peace of mind to continue developing the management-related activities of the company, while the whole process is being properly taken care of. The added experience substantiates the project with valuable information and ultimately assists the company in the final approval of the credit line required.
In Brazil, there are several institutions that offer such credit lines and Rumo Negócios is prepared to work on your projects with the following institutions: BNDES, FINEP, Fomento Paraná, BRDE, among others.
It is a collective funding method that resembles what is known today as a “virtual going dutch”, and which attracts people to invest in your project.
In crowdfunding projects, you submit your project for a preliminary assessment by the platform’s administrators and, once some necessary and minimum requirements have been met, a specialized crowdfunding site will be registered, rightfully authorized by the Securities and Exchange Authority (CVM), and is apt to proceed with the funding.
Once published, deadlines and reward goals are set for investors. If the goal is reached in time, the entrepreneur will receive the funds raised. Otherwise, the amounts will be returned to investors.
Such a method is regulated by the CVM through its Normative Instruction 588 dated 07/13/2017. It allows companies with annual revenues of up to R$10 million to make public offers through collective funding on the Internet with automatic exemption from registration as required by issuers at the CVM. The fundraising limit is R$5 million per entrepreneur, and to protect investors, one of the conditions is that this type of operation occurs through platforms that have obtained the authorization process from the said authority.
Rumo Negócios has a strategic partnership with a Crowdfunding platform and is able to pre-evaluate projects for future registration and funding.