Capital use · Growth & expansion
Expansion capital that does not come with a personal guarantee and a covenant package.
- $50K–$5M per company
- Typically 10–35%
- 4–12 weeks
- Sits behind your bank
Growth capital from Blue Ring Venture Capital members is an investment of $50K–$5M into an established Canadian $1M–$25M-revenue business with a specific expansion plan — a new line, shift, market or team. It is not a loan or a grant. Members are paid from cash flow through preferred shares, a revenue note or a loan with warrants, and one member joins your board.
When it fits
Growth that a lender cannot underwrite yet
Banks lend against what already exists: receivables, equipment, real estate, three years of statements. Expansion is about what does not exist yet — the second shift, the new territory, the product line that a customer has asked for. The gap between the two is where an owner ends up signing a bigger personal guarantee, taking a merchant cash advance, or turning the order down.
Our members fill that gap with equity or quasi-equity that sits behind the bank. Because it strengthens the balance sheet, it often lets the bank lend more, not less. Typical stacks combine member capital with a CSBFP or credit-union term loan, and, where a project qualifies, a Canadian federal or provincial program — SWODF, FedDev Ontario, BDC or one of the current federal investment initiatives — that requires proof of private match.
- A signed order, LOI or waitlist that the plan depends on
- Gross margin that holds or improves at the larger volume
- Management depth — a second person who can run the day
- A twelve-month cash-flow forecast you built yourself
Typical expansion asks
- Second shift and three hires ahead of a new contract — $250K
- New territory with a salesperson, a truck and inventory — $300K
- Product line extension with tooling and certification — $400K
- Acquiring a small competitor's book of business — $1M+ with bank
Structures that pay from growth, not from a sale
Growth deals are usually preferred shares with a dividend and a buy-back right, or a revenue note when revenue is the clearest signal.
Preferred shares with a dividend and buy-back right
Cash yield from year 1–2, redemption after 5–7 years.
Revenue-based note
A fixed share of monthly revenue until a 1.5–2× cap.
Shareholder loan with warrants
Interest plus a small equity kicker.
Majority or 50/50 equity
Majority or 50/50 equity — succession, turnaround or partner buyout.
Bridge loan with an equity stake
Bridge loan with an equity stake — a defined gap to cross, repaid from cash flow, with a share of the upside.
Also possible: Common shares (Minority equity — the owner stays in charge. Only with a clear path to an exit or buy-back); Convertible note / SAFE (Startup track only). Every deal is negotiated directly between you and the individual members who take part.
What members will want to understand
Where the growth comes from
One or two named sources — a customer, a market, a product — with evidence. "Demand is strong" is not evidence; a purchase order is.
Whether the margin survives
Expansion often buys revenue at a lower margin. Members will rebuild your gross margin by product or job and ask what changes at 1.5× volume.
Who runs the day
If every decision still runs through you, the first thing the capital should buy is a person, not a machine.
How the investor gets paid back
A yield within 12–24 months and capital returned within 5–7 years from cash flow — the plan needs to show the cash, not just the revenue.
Growth capital questions
Is it better to take a loan and keep all the equity?
Often, yes — if the bank will lend enough, the covenants are workable and you are comfortable with the guarantee. Members will tell you that. Equity makes sense when the bank stops, when the growth is a step change rather than a slope, or when you want someone at the table who has done it.
What ownership percentage is typical?
For growth capital, where you are staying in charge, positions of 10–35% are typical, depending on profitability and the structure. Preferred shares with a buy-back keep the long-term dilution lower than common shares. The stake is minority or majority across the group as a whole — a turnaround, a succession or a partner buyout can mean 50% or more — but a growth round for a profitable owner-run business is normally a minority position.
Can this be combined with a government program?
Frequently. SWODF, FedDev Ontario's Business Scale-up and Productivity stream, the Regional Tariff Response Initiative and several of the current federal investment initiatives require applicants to show private matching capital. Member capital can be that match. We do not administer any of these programs and cannot speak for their decisions.
What if the plan changes after closing?
Plans change. That is why a member sits on your board — to help rework the plan, not to enforce the original one. Major changes in direction are discussed, not vetoed, unless they involve new senior debt or a sale.
Talk to people who have done this
Fifteen minutes to apply. A named person replies within 48 hours.
Written by The Blue Ring Venture Capital team. Last reviewed .
Out of date, or wrong? Tell us.