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The Pros and Cons of Hedge Fund Capital
Since you’re busy running your business, you may not realize the full spectrum of financing opportunities available to you. You may have heard of credit lines, term loans, SBA loans, and other conventional funding vehicles.
However, you may not want to pursue these “traditional” loans — or you might be shut out of them due to falling short of lending standards.
That’s where hedge fund capital comes in. Hedge funds consist of high-net-worth investors seeking specific investment opportunities with higher potential returns than traditional investments (such as publicly-traded stocks and bonds).
Your small business may be able to attract the investment it needs from a hedge fund if you can demonstrate future earning potential.
Fundvisor has a strong understanding of hedge funds, and we’re able to connect you with one that fits your business’s needs.
But we also want you to be informed about hedge fund capital, so we’ve compiled some of the benefits and drawbacks of using it below.
The Cons of Hedge Fund Capital
- Confusing Financing Structure
Hedge fund lending isn’t as straightforward as traditional lending. Although having several financing structures available gives you options, it can also cause confusion.
Working with an expert can ensure you don’t make any mistakes in the confusing hedge fund capital world.
- The Hedge Fund Has Equity
When a hedge fund invests in your business (if they go the equity route), they gain partial ownership. That means they have a say in your operations.
This isn’t a big deal if you have the same viewpoints as the investors. But if your opinions clash, then you may have new problems to deal with.
- The Hedge Fund’s Returns
If the hedge fund invests in your business, and thus gains equity, they are entitled to a certain portion of your returns. This can be much costlier than a fixed-interest, low-rate loan.
Is Hedge Fund Capital Right For You?
You may have struggled to get fair financing — or any financing at all — through traditional avenues. In that case, hedge fund capital can provide the funding you need to grow your business.
Understanding the hedge fund capital world is tough, though. Fundvisor is here to help.
We look at your current financial picture to determine your best option. If we think hedge fund capital would work best, we’ll then paint your financials in the best possible light to attract investment from hedge funds. We’ll handle the hard work because you have a business to run.
Schedule your free 30-minute consultation with Fundvisor today.
Fundvisor is here to help if you aren’t sure which short-term financing source is right for you. We’ll deal with the paperwork and phone calls for you so you can get the funding you need without wasting valuable time.
Helpful Tips & Information
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