3 Ways Law Firms Can Raise Capital For Expansion

3 Ways Law Firms Can Raise Capital For Expansion

Businesses are developed with the intention of expanding them to new heights. And when it comes to law firms, they are also no different.

For the growth of a law firm or any other business, one of the most important things is attracting money from investors and raising seed capital. Expanding the business by raising capital is one of the key factors that facilitate the growth of the business. A business that needs to expand via after tax profits will take many years to grow. If you have an innovative idea, it might be too late if you need to come up with the money through cash flow.

There are various ways in which law firms can generate capital for growth. Here are 3 ways in which law firms can raise capital for expansion:

Launching a crowd-funding campaign is one way to raise capital for law firms.

Crowdfunding has shown to be a pretty effective way of raising expansion capital at times and over the years many successful businesses have crowd-funded themselves in the initial stages after the bootstrapping process.  Crowdfunding helps business owners to interact with likeminded people who would love to take up an interest in the core business. This also helps the business owners in the next steps for funding when they plan to go more aggressive about their need for capitals for expanding into a bigger venture. These likeminded people help the business owners in developing better business pitch and effective plans for further rounds of investment. Apart from that crowdfunding, if done right, can help in raising millions in funds which can be used for expansion.

Angel investment is another great way of getting the capital required for expansion. 

Angel investors are individuals who are accredited to do the job of investment in promising ventures and they can either work alone or can team up with other angel investors to create a fund for the investment purpose in various enterprises.  For a law firm, it is mandatory to make sure that before approaching any angel investor there is an excellent business plan and pitch in place. This will make sure that the angel investors can find the salient points of the business that may be able to push the business forward in the competition. This way the firm gets the required capital that is needed by the law firm to expand.

A business loan from banks or financial institutions can also help in the expansion of a law firm.

There are, however, a few important things the company, which is applying for the loan must keep in mind as loans are generally only granted to firms which have been in business for a minimum of 2 years and have had a certain proven financial record. Loans are granted to firms which have a strong record of good annual revenues and, they need to have a good credit score to be eligible for loans.

Apart from these are three options of generating capital for expansion, venture capitalists are also another way out. However, venture capitalists are usually known to invest in more settled businesses that come with a strong track record and very clear plans for their future. If your law firm conforms to those criteria, this is also a brilliant way to aim for the higher skies!

John Norwood
John Norwood is best known as a technology journalist, currently at Ziddu where he focuses on tech startups, companies, and products.