Alternative Funding Options for International Growth

Kilian Cawley | 19 Nov 2020 | UK and Ireland Perspective

What a year 2020 has been so far, unprecedented, unforeseen, and really, unbelievable. However, despite the unusual nature of this year, there are the beginnings of some green shoots emerging from the scorched earth of the economy. The ‘B’ word, Brexit, is the present which keeps on giving, could the US Presidential election be a catalyst for a change in tone for our UK neighbours and their negotiations with our EU partners. The announcement by Pfzier of the promise of an effective vaccine on the near horizon is potentially the light at the end of a very long, dark tunnel.

Despite the recent challenges, businesses are looking to the future positively. In the case of Irish companies, given the relatively small size of the Irish economy, growth for most companies involves looking to international markets and developing strong export led growth strategies.

International growth can take many forms and every company has a different strategy which suits their requirements. From establishing sales teams in market, identifying sales distribution partners or through acquiring companies already located in the international market, one key factor in common is that a financial investment will be required. The level of investment will vary; however, experience has proven that companies cannot enter international markets on tight budgets and availability of ongoing adequate funding will be a key success factor.

Fortunately, in the past number of years a deeper pool of growth capital (both equity and non-dilutive), has become available to Irish SME’s as they seek to achieve their international growth ambitions.

Traditional funding sources continue to be available through the pillar Banks and through the Strategic Banking Corporation of Ireland (SBCI), which is government supported with guarantees of up to 80% provided by the State and coupled with very attractive interest rates and flexible terms. Alternative growth funding or non-bank lending, compliments traditional banking products in many ways.

The Irish growth capital community have been very active in 2020, assisting companies to raise working capital to access new markets. In addition, there is strong activity in this area for other activities such as acquisitions, which are not just in the domestic market but growth capital is also ideal for foreign company acquisitions as it overcomes the inherent geographical conflicts.

Other areas where this funding can help companies is to facilitate MBO’s and MBI’s and to assist increasingly in shareholder reorganisation’s and buy backs.

The impacts of COVID & Brexit are key reasons why Irish companies should familiarise themselves with alternative growth capital providers. Growth plans need to be integrated with realistic funding packages. The key advice for companies is to be clear on their future and have conversations with providers early, as the options available will be clearer and will facilitate potentially more seamless growth.

OCO Global would advise companies to take expert advice when looking to enter new international markets. Time spent assessing the correct market, establishing a strategy which outlines the correct market entry and expansion approach, will save significant time and money in the future and will lead to greater potential for success in the new market.

While having sufficient funding in place is one part of the growth strategy jigsaw, companies must be ‘match ready’ prior to embarking on an export journey. The questions being asked are many:

·       Is the company properly structured?

·       Are the team properly trained?

·       Is there a local recruitment strategy?

·        Is the product or solution properly positioned for the new market?

·        Who are the local stakeholders and regulations?

·        Who are the target customers?

·        What is the best distribution channel and who can help us in the local market on the ground with language?

·        Who are the local authorities?

·        What elements of local culture do I need to consider?

·       Where can I set up an office?

·        Who can advise me on legal and financial queries?

OCO Global’s exporting services are able answer to these questions and more.

Irish businesses are looking positively to the future. Accessing adequate funding is improving as the pool of providers deepens with a wide variety of options which best suits, is up to the company to assess and this should be done through familiarisation of the providers and opening up early conversations.

The global market can be a daunting prospect for any company, however with help from the team in OCO Global, this can become a very successful opportunity and much easier and less risky prospect.

Through years of experience, knowledge and established and trusted international networks and connections, OCO Global is your trusted international business partner.

If you would like to discuss your company’s growth strategies, contact Kilian Cawley, Director Ireland – Kilian.Cawley@OCO

You can view the video from our recent webinar on Alternative funding for International growth, featuring our partners at Duff & Phelps and Proventus capital Partners, Click Here .