If you are seeking out equity investors for your company, one of the decisions that you will have to make is whether to opt for majority or minority investment. Both types have their pros and cons, so you will have to decide which model makes the most sense for your business. A few things to consider when making this decision would be what you will be using the funding for, your personal goals, your business goals, and what you would ultimately like to see for the future of your business.

Here are a few things to consider to help you determine which option is right for you.

Minority investment

A minority investment is provided in exchange for ownership of less than half of the company, making the minority investor a non-controlling partner. Usually, with this type of investment, the founders or existing management retain decision making power for the company and plan to continue to stay on for the medium to long-term with the business.

Minority growth funding

This type of funding is made for the specific purpose of scaling up a company and allowing entrepreneurs to stay in the driver’s seat. Typically, the funding will go to the company’s balance sheet so that it may stimulate growth. This funding may go toward investing in assets, expanding the business to new geographies, developing new products, hiring more staff, etc.

When should you opt for minority growth funding?

Some scenarios where you might want to consider minority growth funding include:

• You require capital to grow your business
• You wish to scale up without adding debt to the company
• You wish to retain decision making power in your company
• You do not want to sell the controlling interest of your company to another person or entity
• You may want to take some money off the table to stay motivated to growing the business over the long term

Majority investment

A majority equity investment is one in which you sell more than half of your company in exchange for funding. Often, a majority investor will have control of the business and be able to have the final say on key decisions. In some cases, a majority investor may allow management to retain control of decisions concerning certain aspects of the business, but it is important to get legal advice on such terms before you agree to it.

When should you opt for majority investment?

You might consider majority funding if:

• You require more funding than a minority investor would be able to provide
• You would like to stay involved in the business operations but don’t mind having another partner come in to run the business
• You still wish to keep a minority share of the company that you may benefit from should the business be sold at a later date

Contact CBGF today

At CBGF, we offer minority investments to help business owners grow their companies. If you are looking for a minority investment and would like to learn more about how we might be able to benefit you and your business, contact us today.