CFOs reveal how businesses can finance their growth beyond the banks

Experienced CFOs at top companies in Cyprus recently shared their expertise on how businesses can look beyond traditional channels to finance their development.

As part of GOLD magazine’s March cover story, the CFOs answered the question ‘Most businesses rely on banking finance for their growth. Are there any other ways to finance their operations?’

Thirteen CFOs were interviewed and we feature a selection of the answers from six below.

They are pictured above, left to right, Eliza Livadiotou, Executive Director Finance, Bank of Cyprus, Georgia Pitta, CFO, ECOMMBX, Alexis Alichanidis, Group CFO, Exness, Antigone Modestou, CFO, Cyta, Konstantinos, Katechos, CFO, MHV Group and Loizos-Andreas Hajiloizos, Group CFO, Windsor Brokers.

Eliza Livadiotou, Executive Director Finance, Bank of Cyprus: In Cyprus, funding traditionally comes from equity or banking finance. However, there’s a need to diversify through the stock exchange, private equity and venture capital initiatives. Diversifying funding sources enhances economic resilience and there’s a collective opportunity for stakeholders, including banks, to support a more comprehensive funding approach that benefits all parties.

Georgia Pitta, CFO, ECOMMBX: The company’s operations can primarily be financed through bank lending as well as financing from shareholders (equity financing). Depending on the industry, other financing methods include crowdfunding, peer-to-peer lending and even government funding or grants. For startups, in addition to the vision and idea, a critical component of the business plan is the chosen financing method. Companies determine their financing approach as part of their initial strategic business plan. The CFO’s responsibility is to evaluate, oversee and ensure that capital is raised and managed in accordance with the plan, ensuring that strategic targets are monitored to make the company profitable and consequently self-sufficient in supporting its wider operations.

Alexis Alichanidis, Group CFO, Exness: Debt financing, which includes mainly bank loans and bonds, is one of the most popular methods of financing a company’s growth and it is relatively simple and quick. Also, it prevents dilution of ownership. However, startups and high-growth companies might find it difficult to obtain enough funds through debt financing and, consequently, they will usually turn towards equity financing through IPOs or fundraising from venture capital entities or angel investors. Finally, companies can always finance their operations using the profits generated by their business activities, which are retained and reinvested back into the company. This is the way that we have chosen to support our growth.

Antigone Modestou, CFO, Cyta: Cyta relies on its own funds to finance its extensive development programme and day-to-day operations. However, alternative financing options include profit-sharing arrangements, particularly in new or innovative lines of business. This could involve co-investment in the development of new products and processes, as well as joint ventures or co-investment in strategic investment opportunities.

Konstantinos, Katechos, CFO, MHV Group: Corporations will always look to leverage equity with debt, optimising their capital structure and increasing shareholder value. Naturally, the obvious place to seek debt financing is the banking system. However, businesses can also raise debt by issuing corporate bonds and debentures to institutional investors and individuals, through crowdfunding, etc. It’s worth mentioning that the European Commission has introduced the Recovery & Resilience Facility (RRF), whereby low-cost loans are provided through the banking system to member-state businesses to support recovery from the recent crises. Last but not least, let’s not forget government grants and subsidies which, subject to certain conditions, are a form of financing that comes to businesses usually for free.

Loizos-Andreas Hajiloizos, Group CFO, Windsor Brokers: Internal sources play a pivotal role in financing, with organic growth facilitated through retained earnings or injections from shareholders, thereby supporting the necessary expansion efforts. Equity financing represents another avenue, with venture capital emerging as a key player in this domain. This involves investors providing capital in exchange for equity, establishing a partnership that aligns interests and promotes shared success. On the other hand, debt financing presents a distinct approach, entailing the issuance of bonds and debentures, paying periodic interest and committing to the return of the principal amount at maturity.

These interviews first appeared in the March edition of GOLD magazine. Click here to view the interviews with the 13 CFOs.