Question: What is the best business structure for my company and raising capital?Answer:
If you are considering raising capital, you should evaluate whether your business structure facilitates investment and how well it protects your business’ interests. Sophisticated investors such as professional investors and venture capital firms will expect to see a dual-company structure. A dual company structure offers a clear separation between:
- your business’ assets (the holding company houses all assets); and
- liability while trading (an operating company or subsidiary may incur liability).
The holding company protects assets from any liabilities that the operating company may incur. Investors will expect your business structure to:
- offer limited liability,
- protect your business assets; and
- allow investment where your valuable assets such as intellectual property are held.
In a dual-company structure, an investor will hold their shares in the same location of all the assets, the holding company.