Growth capital provides funding to growing companies as well as to their shareholders. It is a type of private equity investing. However, this form of capital is used during a transformative period for the company, usually to support scaling, develop new product offerings, enter new markets or finance acquisitions.
It is a growth-first strategy, emphasizing investment in the key areas that drive sustained growth including product, go-to-market, acquisitions, and other initiatives that support total available market (TAM) expansion and growth. These opportunities typically require investment capital to support growth as well as provide some liquidity for shareholders.
Private equity investments may supply the capital for shareholders with limited support for growth initiatives, whereas growth capital offers the best of both worlds:
“We don’t define what we do actually as private equity. We’re a growth capital firm,” Sumeru Managing Partner Kyle Ryland said during the What Can Capital Mean to a Growth Stage Company podcast episode.
“We’re not a passive minority investor that is going to come to four board meetings a year and cheer from bleacher seats. We want to be engaged.
“We want to help. We’re going to provide the capital and the tools to support your growth strategy and also offer some liquidity.”
Learn more about growth capital: