Jurisdiction(s):
United Kingdom

Key definition

Development capital definition

What does Development capital mean? In legal practice, development capital (also called growth capital) describes minority or non-control investment in an established company to fund expansion, acquisitions or operational restructuring, usually without a change of control. It is a market term rather than one defined by legislation or case law, used across private equity, M&A and corporate finance. Typical providers are private equity growth funds, late-stage venture capital funds and other institutional investors. Instruments commonly include ordinary or preferred equity, convertible loan notes, and mezzanine debt (often with warrants). Investors usually negotiate information rights, reserved matters, board representation and anti-dilution protections. Proceeds are...

Development capital investments in UK companies: due diligence, approvals and key documents (articles of association, subscription and shareholders’ agreement)

Published by a LexisNexis Corporate expert

Practice notes

Development (or growth) capital typically means putting funds into a well-established business that generates income and Profits, yet lacks adequate cash to finance expansion or restructuring.

Background to Development capital investment

Why seek investment?

A company may pursue this type of Private equity to:

expand its business
restructure its operations
fund a significant acquisition
rework its balance sheet, eg by reducing debt

Such businesses often cannot assume more borrowing, whether because of current leverage or prevailing market conditions. Private equity is viewed as a practical alternative. Typically, this kind of funding does not trigger a change of control, as investors acquire a minority shareholding. Moreover, unlike other private equity styles, investors do not heavily involve themselves in day-to-day management. Current shareholders are not seeking an exit and the management team remains in place.

Types of investors and investment

Capital for companies seeking development funding is provided by various sources...

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Web page updated on 21/05/2026

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