Capital formation for a small business is one of many paradoxes you will encounter.  As you bring in equity, you share ownership and must provide proper insight and oversight for these new shareholders. If this is the first time raising capital for the small business owner, this will lead to new challenges in sharing the "power," and in fact, create new levels of accountability with which you are probably unfamiliar. On the other side of forming capital, a small business owner can incur debt, but often the conservative nature of bankers doesn't understand growth capital.  If they do make the investment it can have unforeseen and seemingly restrictive covenants attached. The best capital formation I have seen occurs when a business owner unquestionably understands their business model and can propose successful replication of a measurable model. The business owner must understand all the life cycle milestones of their customer, from prospect to end of life-and all the points and motivations along the way.  If the business owner understands this in persuasive detail and can demonstrate how capital affords growth as a sustainable rate, then capital formation becomes quite simple. It's a much easier proposition when the business is predictable for the investors.