Equity calculation for a startup company

Start-up financing: tips on corporate financing and funding

Every company starts with one Business idea. In the seed phase, you devote yourself to this in detail and specify you. So that you can secure start-up financing and sustainable funding for your own start-up as quickly as possible, it is advisable to have a Business plan to create. This will make it easier for you later to convince financiers of your concept and to encourage them to invest in your start-up.

Market and target group analyzes help to develop a future-proof business model. Discussions with people from the relevant area can also help to review and substantiate your business idea.

In the seed phase, you should also deal in detail with the organization of your team. First of all, you need to clarify whether you have any further Reinforcement and Expertise for the implementation of your start-up. After all, it is not the business plan alone that convinces investors and lenders, but above all the people behind it and their know-how. You increase your chances of receiving a subsidy considerably if the team has all the necessary skills and presents itself competently to potential investors.

Contacts in your branchto knot can be another important contribution to the future of your start-up: You can benefit from the experience of others with regard to business financing and start-ups and possibly also find one or the other missing piece of the puzzle. Quite a few founders have met people while networking who were also enthusiastic about the business idea and therefore contributed financially or with their expertise to the start-up.

In addition, it is important that you deal with how much money you will likely need to implement your idea right from the start. A solid planned financing Not only does it show that you work professionally, it also shows your donors how much of the total amount they are likely to need for start-up financing. Always keep in mind that subsidizing startups that have not yet been established carries a high level of risk for investors. So you should always give them the greatest possible transparency and convince them that your project has a good chance of success.

The Seed stage has an average duration of approximately one year. The funds required during this time are - compared to the later stages of development - still quite manageable. You go - depending on the respective industry and the product - from approx. 50,000 to 500,000 euros that a start-up needs on average at the beginning. However, the search for financial means is the most difficult during this period, as you will not make a profit at first and you can usually only offer a small amount of security to the donors. Classic forms of financing a start-up company in the seed phase are:

  • Own capital: Some founders can fall back on saved money that they use as equity for their start-up. However, full financing through one's own savings is the exception.
  • Family, friends and enthusiastic wealthy people: People within the family and friends can also help financially so that your start-up has more equity. But shareholders who are impressed by the corporate concept may also want to invest in it. This group is referred to in English as “Family, Friends and Fools” (FFF) - although the term “fools” is meant rather jokingly: When financiers donate money to start-ups (e. B. because they are so taken with the business idea or simply find the founders sympathetic), they quickly overlook weaknesses of the start-up or the risk involved in the venture.
  • Business angels and private business incubators: Entrepreneurs have the opportunity to receive monetary as well as advisory support through cooperation with business angels and / or start-up start-up centers. Business angels promote companies in which they see a lot of potential and long-term profit opportunities, and act as mentors for the founders. In addition to equity, they also contribute their know-how and network to the company. For this they get company shares and thus become co-owners of the start-up. Profit-oriented start-up centers proceed in a very similar way.
  • Public funding programs and grants: Founders can also apply for business start-up funding. Many of these funds come from state subsidies for start-ups, but some also come from private-sector institutions such as banks. In addition to classic funding programs, participation in an ideas or business plan competition in the seed phase can also be an option.
  • Funding from the crowd: Furthermore, crowdfunding, investing and lending can contribute to the financial basis of your start-up. If you decide on such a campaign, you should definitely take enough time to prepare it professionally. The presentation of your project on the website should be detailed, but not too rambling, and ideally also include a high-quality corporate video.
  • Loans for start-ups and micro-mezzanine funds in Germany: You can submit applications for start-up loans and the BMWi's micro-mezzanine fund even before the official start-up is established.