1. How can a startup be financed?
Count on Sources of funding Appropriate information is vital for start-up companies.
These organizations need constant financing to promote their projects.
Their income is still in its infancy and they need to gain time after time, so having a urgent financing for companies It is a highly recommended option.
Given the fragility of these companies, a miscalculation or a bad choice of the Sources of funding it can dangerously weigh down the economic and financial situation of the company.
2. Why do new companies need more financing?
The startups they start from scratch and must compete with established companies in the market.
The investments required, regardless of the type of activity performed, are constant.
For example, some fixed costs to which these companies are immersed to start their activity are the following:
- – Acquisition of necessary assets.
- – Payment of facilities and supplies.
- – Initial payroll.
- – Purchase of raw materials.
- – Storage and transport.
- – Investment in advertising, communication and promotion.
In addition to the conventional day-to-day costs, it is necessary to take into account those specific costs of each launch, such as the creation of a website, the logo and corporate identity or the purchase of delivery vans, etc.
The main problem is the initial lack of income.
Although the company gets orders, customers and orders, the billing will mature over time.
Therefore, get urgent financing It must be a priority for the development and continuity of the project.
3. Recommended funding sources
Entrepreneurship requires capital and often many entrepreneurs do not have the necessary resources to start their project.
Therefore, it is very important to know what financing options we have at our disposal.
Surely, from the outset, the most conventional options will occur to you:
Go to the bank or your close ones to obtain resources.
However, startups They are not an attractive market for banking entities due to their recent creation.
For this reason, we list the most convenient sources of financing for these organizations.
3.1 Own capital
Equity refers to the money or resources that the owners or founders of a company contribute to it. Normally they contribute their personal assets, but this is not unlimited and they need to resort to the search for foreign capital.
3.2 the three f's
Friends, family & fools are terms in English that refer to friends, family and "cousins".
They usually make up the closest circle to which you initially turn in your search for financial support.
Your advantage? They do not charge interest —or very little— and have very flexible repayment terms.
The danger is that you will mix your professional activity with your personal life, which can cause misunderstandings and arguments with those closest to you.
3.3 Bank
It is an operation in which an entity (lender) grants, through an agreement between the parties, an asset -generally money- to another entity (borrower), in exchange for interest.
The participative loan is an alternative widely used in newly created companies. Among the advantages we highlight the following:
- – The remuneration (interest) is linked to the evolution of the benefit of the borrowing company
- – Interest is deductible from Corporate Tax
- – The amortization is usually long-term and they usually have a grace period
3.4 Crowdfunding
El through crowdfunding is a form of financing online based on collective contributions from numerous investors.
Categories through crowdfunding:
- –Crowdfunding investment (Crowd Investing):
The remuneration does not have to be economic, but can be through shares, profits or shares of a company.
- –Crowdfunding of reward (reward crowdfunding)
In this case, a reward is offered in exchange for the contributions received in the form of products, services or experiences.
- –Crowdfunding of loan (Crowdlending):
In this type of through crowdfunding, an interest rate is applied to the contributions received, that is, the recipient of financing will return the money they received plus the agreed interest rate.
As they are loan operations, they require a more exhaustive analysis of documentation (business plan, financial information, etc.) and the financing process requires more time than in other modalities.
- –Crowdfunding donation
In this type of through crowdfunding, the people who finance the project receive nothing in return. Donors provide funds for the sole purpose of keeping the project going. They are usually projects of a solidarity or humanitarian nature.
3.5 Business incubators and accelerators
Business incubators are centers that help companies startups to develop and launch their business ideas, offering support and services in areas of management, finance, marketing y networking in the initial stages.
Business accelerators are institutions that accompany startups to consolidate.
In this process, they are trained and guided in business knowledge and technical aspects to expand the project.
In addition, they allow entrepreneurs to expand their contact networks by exposing their ideas to potential investors.
3.6 business angel
These investors bring capital, experience, and contacts to entrepreneurs with the goal of earning a stake in the company's shares and future returns.
Generally, they get involved in companies in the development phase, they get involved in the business to add value and they invest in sectors that they are familiar with.
Another very common feature is that they maintain anonymity from third parties.
Therefore, they are not speculators in search of capital return, but become part of the project with their experience.
3.7 Capital Venture
Another way to finance a startup is through venture capital entities.
These are venture capital firms that buy shares in young companies with a lot of growth potential.
In general, these types of entities concentrate their investments in business models in cutting-edge sectors such as biotechnology, information technology or artificial intelligence.
They have greater influence on business strategy than investors or business incubators due to the large amounts of capital with which they enter the company and their objective is to sell the acquired shares at a high profitability.
Since there are several sources of financing with which to undertake your business project, we recommend that you choose the one that best suits your needs.
From workcapital, we offer highly recommended business financing for startups, putting at your disposal experienced professionals who will help you throughout the process and adapt the financing to your circumstances.
We also help you through our services promissory note discount y Advance Bills, granting you immediate liquidity in an agile, transparent and simple way.
Contact us without obligation!
