Compare risk capital to other financing sources

RISK CAPITAL	BANK LOAN
Substance of the transaction (financing and support) differs from the legal form (potential or actual equity owner).	Legal form (loan contract) and substance (financing through loan) of transaction are the same.
Mid to long-term. In general term is flexible and can be renegotiated.	Short to long-term. In general term is fixed and has to be fitted.
No obligation for repayments strictly by schedule. Investor oriented to the performance of the business, free cash flow and equity related income.	Has legal rights to periodic interest payments and principal repayment.
Risk capital financing, generally requires certain share of your enterprise to be held by investor in order to protect his high risk in the case your company fails.	Loan does not require any participation in your enterprise by the loan provider
Current cash flow can be reinvested into the enterprise to support future stronger cash flow to make good dividend payments.	Strong current cash flow needed to meet interest and principal payment requirements.
Current cash flow can be reinvested into the enterprise to support future stronger cash flow to make good dividend payments.	Assistance and consultancy not always available. Usually considered for a seperate charge.
Investor is interested in success of the enterprise, so is eager to assist and support management actively in order to attain desired performance of a business.	Mostly technical relationship with loan provider, periodic reporting and individual enterprise checks by the lender.
Tight partnership relations with risk capital investor. Investor is likely to have representative in the enterprise’s board to provide continuous information exchange.	Lender does not share risk associated with your business. In the case of failure, demand loan repayment through collateral or liquidation.