Investment Options for Start Up Companies
One of the main challenge facing Irish start-ups is working capital. Bank funding is often not available to start-ups at development stage as the company is not yet trading.
The following are examples of some investment options for small to medium sized companies in Ireland:
- Venture capital funding
A venture capital firm may offer investment to start-ups where they see a long term growth potential. The investment from a venture capital firm can vary from loan investment to equity investment.
- Enterprise Ireland offers investment opportunities to new companies in Ireland at varying levels of investment.
- Management buy-ins can bring certain advantages to a start up company. This involves senior management or key employees subscribing for shares in a company in return for a cash investment.
The main challenge for a small company in negotiating these types of deals is in maintaining control in the company. Often the subscription shares will have stronger, preferred rights than the ordinary shares held by the founders so on a realisation or a winding up, their money comes first.
It is important to ensure that the founding shareholders of a company have the appropriate contractual protection in place.
Our corporate team advise start up companies on all aspects of the investment process from due diligence to negotiation of the investment documents.
Contact our team today for an initial consultation so that we can advise on the steps involved.