The life cycle of accessing capital involves different stages of a business's development and its corresponding ability to obtain funding. The business life cycle is commonly divided into four stages: start-up, early stage, growth, and later stage. In the early stages, companies have limited access to debt capital due to unproven business models and high business risk. As they grow and become more stable, they gain easier access to debt capital. The ability to support debt is linked to a company's life-cycle stage, cash flow characteristics, and its ability to obtain funding through equity.

During the growth stage, companies typically experience negative cash flow due to high investments, but business risk declines as they establish a customer and supplier base. At this stage, companies begin using debt, although equity remains the predominant source of capital.

The later stage growth of a company typically refers to its development after the initial stages of growth and funding. This phase is characterized by a more mature and established business that has likely proven its concept, demonstrated revenue growth, and may be preparing for an exit or an IPO.

The product life cycle is also a factor in accessing capital, as working capital is essential for covering short-term expenses and debt obligations. Companies rely on working capital to cover routine bills and meet short-term debt payments. They can build and maintain working capital through various sources, including net income, long-term financing, asset sales, and issuing more shares of stock.

February 19, 2024