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Raising capital is important for a business looking to expand and grow to the next level. You can certainly go about natural growth, but that can take time and as the phrase goes, time is money. 

This article will detail some of the methods your business can use to effectively raise capital. We will also elaborate on an ILO or Initial License Offering and why it may be the most efficient way to raise capital.

Private Equity

First, we will begin with arguably the most widely known and that is private equity. In short, private equity allows ownership in a company that is not publicly traded. Investors exchange a certain dollar amount for ownership, usually with various stipulations. 

Private equity investors tend to be in the form of private equity firms or high net worth individuals. A major drawdown is depending on the private equity firm, they may want more control than your willing to offer. The reason being some private equity firms look to squeeze everything out of a business and liquidate to boost their bottom line, not yours. 

Venture Capital

Next up is venture capital. Venture capital is under the umbrella of private equity. Specifically, venture capital investors are long-term investors that search for growthcompanies who are just starting out. Like private equity the money comes for high net worth individuals or venture capital firms. 

Since this is a risky form of investing, venture capital typically demands a higher premium. This may require a high interest rate or giving up more ownership than you are comfortable with. Also, it can be difficult to find venture capital money willing to invest in your business.

Initial License Offering (ILO)

Lastly and one of the best ways to raise capital is through an ILO. While its services are new to the industry, the goal is the same as many others, which is to effectively raise capital to generate growth.

How an ILO works is your business would offer licenses to the open market. Then people purchase a license at the listed price in return for royalties. As time goes on, investors are given updates on how the company is progressing and how revenues are increasing.What sets the ILO process apart from traditional funding is for the buyer to receive royalties, they must promote your business through social media and informing friends and family. I bet venture capital and private equity funds won’t do that.