CALLING ALL ANGELS
The perennial question for fast-growing SMEs is how to find enough capital to keep the business evolving. For younger companies, venture capital is often the best option.
At New Water, a business angel has been crucial to the early success of the company. Andrew Pearce has struck a successful deal with a wealthy investor and former colleague.
He says: “I wouldn’t recommend doing it with someone who you didn’t have a decent relationship with because inevitably things take much longer and cost much more than you expect.”
Crunch time is looming for New Water, though. Pearce’s business angel has an iron-clad policy of investing only in early stage businesses, so New Water as it keeps growing will have to look elsewhere for funding. A trade sale to a larger company or venture capital raising from other investors may be the way to go.
“We’ll have to see how things play out,” Pearce says.
Neco has just engaged in a round of capital rising. Esther Bailey says while some market giants are pouring money into areas such as sustainable carbon trading and engineering projects, smaller companies in the $2 million to $10 million turnover bracket such as Neco can be caught in the funding cracks.
“There is a bit of a gap here while companies like ours get big enough for the classic venture capital models to say ‘Okay, you are big enough for us
to be interested in’.”
Bailey hopes a middle tier of investment will emerge as the green market matures.
Wild Child is well used to the pressures of financing. “Funding the growth has probably been the hardest issue,” Leanne Preston admits.
Based in Perth, the business has explored options such as venture capital and private equity funding but has mainly relied on managing its organic growth. That is about to change, however, as Wild Child moves into blue-chip markets such as France, Germany and Italy. It is considering listing on the stock market in the next 12 to 18 months and hopes the rising popularity of sustainable businesses will be rewarded.
Preston is confident that Wild Child’s international success will ensure ongoing streams of capital are forthcoming and help to run and grow the business. “The more goals you kick and the stronger the company gets, the easier it is to attract the capital you need.”
