Equity finance

Getting the right investment can transform your business

Key questions:

Equity financing is raising capital from investors taking a stake in your business for cash. Unlike taking a loan there are no monthly repayments required.

Equity finance can be used across the business lifecycle. It can provide seed finance to tech start-ups, growth capital for established businesses, and support management teams when buying a business. It is a versatile type of finance that can be used alongside loans.

Find out more about equity in our blog post, What is equity finance and how does it work?

Equity finance carries a number of benefits:

  • Investors will bring added value in the form of expertise, knowledge and contacts to help drive your business forward
  • Can be an effective way of enabling faster growth and long-term value creation
  • Carries no repayment obligation 
  • Allows you to quickly take advantage of opportunities which you might otherwise miss by self-funding your business

Debt finance comes in various forms, but it essentially involves borrowing a lump sum, which you then pay back over time plus an agreed-upon amount of interest. There are a number of key differences between debt and equity finance, including repayment, ownership, security, and the fundraising process. Find out more about how these forms of financing compare by reading our blog post, What is the difference between equity and debt?

Building long-term relationships - we provide patient capital to accelerate growth plans and are active follow-on investors to support further growth. Our appetite to provide follow on funding will be influenced by how the company has performed against the milestones set out in the original business plan. We will take into consideration factors outside the control of management, but it is important to be as realistic as possible in your initial business plan.

Minority shareholder - we do not get involved in the day to day running of the business but will participate at monthly board meetings as board observers and will have consent rights to certain matters to protect our position.

Partnership approach – we will spend time with the management team pre-investment to understand the business plan, the commercial environment and opportunity, your team, and the growth strategy. 

Professional and diligent - we will always undertake due diligence as part of our investment process, which can cover financial, management, commercial and legal. We will do some of this in-house, but we may use external expertise when required. 

Collaborative - we align with other shareholders to drive value for exit and bring our experience of working with growth companies to the table.

Active co-investors - For early-stage businesses, we always look to co-invest with other equity partners, as one aim of the Development Bank is to attract private sector funding to Wales. We will work closely with the co-investment partner through the process, often sharing diligence if practical, whilst maintaining our own decision process and consent rights. The exception to this is the Angel Co-Investment Fund, which is passive. Investments from this fund we will follow the investment decisions of the lead angel investor, subject to eligibility rules.

Added value - Post investment, we support value creation planning and have a dedicated portfolio executive who will work with your business to introduce you to our networks and other portfolio businesses.   

Robust boards and governance - We would look to strengthen your board through recruitment of an external non-executive director, but we would look to identify a suitable candidate with the other shareholders and directors to ensure they bring added value and are a good cultural fit. We have an internal database of non-executive directors that we maintain, but we have also used external recruitment agencies and other networks, including that of the management team.

The Development Bank of Wales is one of the most active equity investors in the UK.* Because of the funds we manage we’re able to provide equity funding from seed finance all the way to business succession. We have specialist equity teams who are experts at finding and working alongside other co-investors. We are also able to provide bespoke equity and loans packages to meet your business needs.

Our network

With us as an equity investor, you’ll quickly get access to the support, expertise, and guidance your business needs, including:

  • A high-quality investor network of over 250 business angels
  • Management training schemes
  • Access to specialist consultancy services to help accelerate your growth
  • Referrals to business support services such as Business Wales and Welsh Government
  • A database of experienced non-executive directors to help you strengthen your board
  • Introductions to finance experts such as corporate finance advisers and finance directors

Value creation plan

We work with you to develop a value creation plan and exit strategy, which is aimed at maximising value for all shareholders over time.

 

Sharing best practice

We help you to develop good governance and get the most out of your board. We work with SMEs across many different sectors and can connect you with other businesses to share best practice and develop commercial relationships.

Events

Our exclusive events provide useful information to help you develop your business, as well as the opportunity to network with experts and other entrepreneurs.  

One source of equity finance is angel investment. Angels are typically high net worth individuals who use their own money to invest in companies with strong growth potential. You can find out more about angel investment in our blog What is angel investing?

Part of the Development Bank of Wales is Angels Invest Wales, the biggest angel network in Wales.


Choose your business need

Equity for growth

MIddletons

With investors we've been able to deliver on our business plan a lot quicker.

Middletons, Equity for growth

Whether you’re looking to expand operations, move into new markets, or diversify products, we can give you funding and expertise to execute ambitious growth strategies.

Find out more.


Equity to support buying a business

Just Love Foods equity for an MBO

The positives of having equity investment is experts who are on your side.

Just Love Foods Company, Equity for a management buy-out

We have years of experience in structuring equity finance to support management buyouts, management buy-ins, acquisitions, employee buyouts, and more.  

Find out more.


Equity for developing a tech venture

Coincover

This investment means we can rapidly scale our growth to market and consumer demands.

Coincover, Equity for developing a tech venture

We’re here to support high-growth tech companies from their start-up stage through to exit, helping to create long-term value.

Find out more.


Expanding Horizons with Equity LIVE

 

Expanding Horizons with Equity LIVE

In November 2021 we held a half-day conference bringing leading finance figures and business owners together to share their experiences of equity investment to help businesses based in Wales.

The event included 22 speakers including well-known entrepreneurs and investors such as Piers Linney, Frank Homes and Sherry Coutu.

Key themes were:

  • The Art of Fund Raising
  • Business Angels - Finding the right investor fit
  • The Power of NEDs
  • Succession planning
  • In conversation with Piers Linney

Watch the video of the event

 


 

Beauhurst logo

 

Investing in Wales support report

We commissioned Beauhurst to research into high growth startups and scaleups in the Welsh ecosystem.

The report studies Welsh investment activity between 2011 and 2020 identifying1,215 high growth companies in Wales, which have raised £882m across 1,201 deals over the last ten years.

The research suggests that Wales is becoming a springboard for a new generation of high growth companies.

Read the full report here.

 

*Based on a Beauhurst report, The Deal: Equity investment in the UK in 2020