How to Secure Investment for Business Growth While Maintaining Promoter Control

Can a manufacturing company grow into a giant without the founder losing the steering wheel? This is the biggest worry for most factory owners. Scaling a production line requires a massive investment for business, but you do not have to sell your soul or your authority to get it.

The Growth Dilemma: Capital vs. Control

Manufacturing is a capital-intensive business, meaning it requires significant upfront investment in heavy machinery, factory infrastructure, and raw materials. In practice, manufacturing companies typically need several times more capital than service-based businesses to generate the same level of profit.

The problem? Most business funding comes from people who want a piece of your company in return. If you give away too much, you might lose the right to make big decisions. For an Indian promoter, especially in the MSME funding sector, keeping control is vital to protecting the long-term vision of the brand.

The Current Landscape: A Great Time for Manufacturing

The world is looking for new places to build products, and India is at the centre of this shift.

• Big Numbers: India’s manufacturing sector is on track to reach $1 trillion by 2030.
• Small Business Power: SME funding is a top priority because small businesses contribute 30% of India’s GDP.
• Tech Gains: Industry studies show that factories investing in automation achieve around 20% higher productivity within three years, driven by improved efficiency, consistency, and reduced operational downtime.

Five Smart Ways to Raise Investment for Business Without Losing Control

You can get the money you need while remaining the “boss.” Here are the best business financing options for smart promoters.

1. Strategic Debt Financing

Debt is often the best friend of a manufacturer. Unlike equity, a bank loan does not give the bank any ownership of your company.

• Asset-Based Lending: You use your new machines as “collateral” (security).
• External Commercial Borrowings (ECB): This is just a fancy way of saying you are borrowing money from international lenders at lower interest rates.
• Promoter Funding: You can borrow money by using your existing shares as a guarantee, giving you quick investment for business without selling a single share.

2. Differential Voting Rights (DVR)

Imagine if you could sell a share that gives an investor a part of the profit but no right to vote in meetings. This is what DVR shares do. They allow you to bring in massive growth capital while you keep 51% or more of the voting power.

3. Government Grants and “Non-Dilutive” Funding

The government wants you to succeed. Schemes like the Startup India Seed Fund (with an outlay of ₹945 crores) offer money that doesn’t require you to give up equity.

• PLI Schemes: These give you “cashback” for producing more goods in sectors like electronics or textiles.
• CGTMSE: This is a government guarantee that helps you get msme funding of up to ₹5 crores without needing to show extra security.

4. Mezzanine and Hybrid Instruments

These are middle-ground funding options. Mezzanine finance begins as a loan, not ownership. It converts into equity only if repayment conditions are not met. This structure gives promoters time to grow the company’s value before any dilution occurs, helping balance business investment needs with control and ownership.

5. Silent Partners and Family Offices

Instead of seeking venture capital funding, which often comes with a lot of “advice” and board seats, look for family offices. These are private wealth managers for rich families. They usually take a “minority stake” and stay out of your daily operations.

Comparing Your Funding Choices

Real-World Success Story

A mid-sized Indian car part maker needed $10 million to automate their factory. Instead of a standard startup funding round that would have taken 30% of their company, they used a “Blended Approach”:

• 60% Debt: Secured against the new robots.
• 20% Govt Grant: Through a manufacturing incentive.
• 20% Silent Investor: A family office that took no board seat.Result: The owner kept 85% control and tripled their production.

Future Trends: Revenue-Based Financing (RBF)

A growing trend in investment for business is revenue-based financing (RBF). Under this model, investors receive a small percentage of monthly sales until the agreed return is repaid. When sales slow down, repayments automatically reduce. This approach involves no equity dilution and no fixed collateral, and market studies indicate a strong rise in the adoption of such alternative funding tools over the coming years.

Actionable Steps for Founders

1. Use Debt First: Always try to borrow against assets before selling shares.
2. Check Government Portals: Look for startup funding for manufacturing companies in India via the Startup India hub.
3. Hire a “Hybrid” Expert: Use consultants who understand both the legal and financial sides to protect your “veto rights” in any contract.
4. Draft a Strong Agreement: Make sure “Reserved Matters” (big decisions) always require your personal signature.

Conclusion

Scaling a factory doesn’t mean giving up your dream. By using a mix of debt, grants, and smart equity, you can find the perfect investment for business while remaining the pilot of your ship.

About Solvencis

Solvencis specialises in these hybrid strategies. We offer end-to-end Legal Consulting and Financial Advisory to help you grow without the fear of losing control. Our services include:

1. Investment Banking & Fundraising
2. Corporate Legal Services & SHAs
3. Debt Restructuring & Private Placement
4. Mergers & Acquisitions

• Email Us: inquiry@solvencis.com.