Business Finance Solutions by Recycling Company

A good idea is nice; solid execution even better. But none of it means much without the capital to support it all.

The idea quoted above is from Forbes.Com, an article about The Right and Wrong Ways to Raise Money. I would like to point out the solutions by Recycling Company presented in this article regarding business finance.

Equipment. Because the equipment was very specialized, debt-financing was hard to come by--not that the young company could have serviced it anyway. So the board decided to sell some equity. However, the environmental industry was not attractive to venture capitalists with dot-com stars in their eyes. Instead, RC used angel financiers, mainly from the board’s network, along with some friends and family money.

Real estate. Initially, RC leased its building at market rates, even though there were plenty of subsidies available for those who knew where to look. (I renegotiated the terms with the community whereby RC received a chunk of subsidized financing.)

Working capital. RC used a combination of equity and loans guaranteed by the Small Business Administration--though the founders had to pledge significant personal real estate as collateral. Cash flow was healthy enough to service the debt.

Additional working capital for growth. As the venture grew, the company sold off additional equity and I found attractive debt financing from a regional development financing institution.

Research financing. This money came from a state loan program designed to encourage new-product development.