Selling to scale – Minority stake fundraising
Rahid Rashid, 15 October 2025
Rahid Rashid, 15 October 2025
When most business owners think about bringing in funding to scale their business, their first port of call might be the banks, followed by alternative finance, but at some point outside investors may seem like the only solution.
Bringing in new shareholders, doesn’t mean selling up completely though. Selling a minority stake can give you the capital you need to scale while keeping you firmly in the driving seat.
Think of it as your own Dragons’ Den moment. An investor comes on board with funding and know-how, but you still run the show.
In some instances, you can even factor into a deal the potential to buyback shares in the future, if you feel the need to regain your full shareholding.
A minority stake deal lets you sell part of your business while staying in control of day-to-day decisions.
As long as you retain more than 51 per cent of the shareholding you remain in the driving seat, albeit with additional oversight from an investor.
In return you get capital investment to expand and take some risk off the table, without waving goodbye to your company forever.
For founders who want both security and involvement, it can be a useful middle ground, but like any transaction it isn’t entirely free of risk.
It’s not always a simple swap of cash for shares. Some investors prefer more creative structures, such as preferred shares or mezzanine finance, which give them returns but don’t tie your hands too tightly.
It is important to consider your options and speak with your potential investor(s) to negotiate the right type of deal structure that meets all parties' requirements.
Getting the terms right is crucial, as it affects everything from voting rights to future dividends.
It is important you seek professional corporate finance and legal advice throughout this process. Do not attempt to go it alone, even if you are an experienced entrepreneur.
Even though you’re not selling the whole business, the process still feels very much like one.
You’ll need to go through non-disclosure agreements, prepare detailed information packs and be ready for a deep dive into your numbers.
Investors will want to know what they’re buying into, so preparation makes all the difference ahead of due diligence from your new potential shareholders.
Not all investors are created equal. Private equity houses, growth funds and strategic corporates may all show interest in your company, but finding what is right for you and your company’s strategy is critical.
Take your time and “window shop”, if you can, to find the best partner for you and your business. This means an investor that shares your vision and brings something extra to the table, whether that’s sector expertise, contacts or credibility.
The wrong partner, by contrast, can hold you back and tie you up in red tape and unnecessary stress and pressure.
Minority deals can also be the start of something bigger. It’s not uncommon for an investor to return later for a majority stake. Done well, today’s growth deal can pave the way for tomorrow’s full exit.
With valuations more realistic than in the boom years, now may be a sensible time to explore this route. Minority stake fundraising gives you the fuel to grow, without giving up the wheel. Like the strongest Dragons’ Den pitches, the best deals combine money with mentorship.
If you’re looking to scale without stepping aside, selling a minority stake could be a smart move. At Lubbock Fine Corporate Finance, we’ve helped many owners weigh up their options and structure deals that deliver both growth and peace of mind. Get in touch with Partner, Rahid Rashid (rahidrashid@lubbockfine.co.uk), to see how we can help you plan the next stage of your journey.
