PE Primer

Why and when to take on capital?

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At Birchway, we believe that fast-growing, capital efficient businesses are overlooked from an investment perspective. These are the kinds of businesses which we get most excited about. We think too many headlines go to tech businesses which grow at breakneck speed, but are fundamentally unable to turn a profit. We do understand that there can be strategic reasons for wishing to grow rather than turning a profit for a period (and a number of our portfolio do this). Fundamentally however, we believe that business value is determined by the ability of companies to generate positive cashflow and that businesses who achieve this should get more attention. Growing your business quickly and making profit is enormously challenging. We have huge respect for the entrepreneurs that are able to achieve this and its why we love to partner with these businesses and focus on this section of the tech market.

The decision on whether to take on additional capital for your business can be a tricky one. Questions which we frequently get asked include; Do I need to give up control? Can I still run the business? What are the potential benefits of taking on additional funding at this stage?

At Birchway, we invest typically €5 - 20m in fast growing businesses. You should view us as a partner who can help you grow and develop, taking your business to the next level. We are minority investors and post investment, we will typically have ownership of 15-35% of your business. That means that you are still very much in charge.

There are numerous reasons why our portfolio companies decide to partner with us. These can include secondary transactions (founders wishing to take some money off the table, personal reasons, early investors looking for an exit), capital to fund growth (investing in sales & marketing, new product development, geographic expansion) or to fund mergers & acquisitions.

Whilst we do provide capital, the Birchway team have all been operators, working and leading numerous companies with revenues >€5m. We believe that this enables us to offer more than just capital, but can bring our tangible experience to bear in helping to grow your business. Between us, the Birchway team have more than 20 years of operating experience. In addition, we have an extensive network of operators who frequently assist our portfolio companies whether it is customer introductions, supplier relationships or other important relationships.

In addition to our experience as operators, we have extensive experience in finance. We realise the value which can be created through mergers and acquisitions, thinking about the right type of lending for your business and helping you prepare for a sale (when the time comes), to maximise your return.

If you have a business with >€5m in revenues, growing quicker than 20% year on year and are thinking about taking on external capital, we’d love to hear from you -

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