January 1, 2005
Shopping For Capital
Q: Are there investment banks that specialize in providing capital for minority media firms? How do we contact them? Are there limits to what they can provide?
— D. Cason, New York
A: Finding capital is a major challenge for minority media firms. The large investment banks and institutional investors employ such high benchmarks that small, black-owned media companies aren’t even on their radar screen.
The good news is that there is a viable option for raising the cash you need: private equity firms. These investment firms specialize in providing equity financing in exchange for a share of ownership in the company. Equity financing allows a business to obtain funds without incurring debt, or without having to repay a specific amount of money at a particular time.
So what’s the best way to find the right private equity firm? The first place to start is blackenterprise.com. Use the search term “private equity” to access information in the archives and find firms on the BE INVESTMENT BANKS LIST. You can also contact the National Association of Investment Companies (www.naicvc.com; 202-204-3001). It can provide you with lists of registered private equity firms. Once you find several potential candidates, get the names of their last 10 clients and contact these customers for advice to help you find your way.