Capital and fundraising for founder led lower-middle market companies
This page is for founder led lower-middle market companies with 5 to 50 million in annual revenue. The goal is to choose the right capital for the job, raise the right amount, and stay deal ready.
Questions and short answers
Should I use equity, bank debt, or non dilutive funding for the next step
Match the tool to the use of funds and risk. Use a revolving line for working capital tied to receivables and inventory. Use a term loan for equipment or build outs with clear payback. Use equity for step change growth, M and A, or when cash will go negative for a period. Add non dilutive support such as grants or tax credits when you qualify. Blend sources to lower risk.
Choose equity, debt, or non dilutive funding
How much should I raise and what milestones should it fund
Plan for eighteen to twenty four months of runway in most cases. Tie the raise to a small set of value milestones such as revenue, margin, new capacity, or entry to a new market. Build base, upside, and downside cases and include a buffer for delays. Show a clear use of funds and the next funding options if needed.
Size the round and set milestones
What do lenders and investors want to see at our stage
Lenders want coverage ratios, collateral quality, cash flow control, and steady reporting. Investors want a clear market, unit economics, repeatable growth, a plan to reach the next value step, and a team that can deliver. Both groups want clean books, low customer concentration risk, and a simple plan to manage cash.
Prepare for lenders and investors
How do I prepare a clean data room
Use a clear index and folders. Corporate records, cap table, financials and forecasts, tax, legal and contracts, HR, IP, operations, sales and pipeline, customer metrics, and insurance. Use standard names and dates, remove duplicates, and lock permissions to need to know. Add a short FAQ and an updates log so reviews stay smooth.
Build a clean data room
Related links
/finance-and-profitability
/cash-flow-and-banking
/governance-and-boards
Last updated: August 27, 2025
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