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Financing your business
There are several sources of financing available for businesses at different stages of growth, including equity financing through sources like seed funds, business angels, and venture capital funds, as well as loan financing from banks. Equity financing provides ownership in exchange for risk, while loans require interest payments and repayment but provide no ownership. Public sector financing through grants can also be an option. The type of financing needed depends on the business lifecycle stage, from R&D funding through seed capital and grants, to startup financing from angels and venture capital seeking high growth potential, to exploitation and growth funding from banks, angels, and venture capital.
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Financing your business
- 1. Financing your business Sources of finance for startups
- 2.
- 3. Equity Capital Ownership Willingness totake risk No interest and repayment Profit at exit – maybe…
- 4. Sources of EquityCapital FFF Seed Funds Business Angels – Individuals – Networks Venture Funds Corporate Venture Stock Markets
- 5. Loan Capital Low willingnessto take risk Interest and repayment starts immediately No ownership
- 6. Sources of LoanCapitals Banks Real Estate Funding Guarantee Schemes (through banks) FFF
- 7. Other types Grants andAwards Funds Leasing Factoring Negotiate payment terms
- 8. Financing & LifeCycle R&D Start up Exploitation & Growth
- 9. Expand product to national markets BRIDGE IPO or sale Completing product STAGE 1 development & Preparing startup STAGE 2 Capital to maintain Full scale until pending manufacturing & sales liquidity event or initial expansion SEED STARTUP Product development, market research & Concept building management infrastructure
- 10. R & DFinancing Seed Capital – Often connected to universities Public Sector – If R&D is in the interest of society Venture Capital – If the potential is really promising Corporate – If it is of strategic interest
- 11. Start Up Financing BusinessAngels – Growth potential necessary Venture Capital + Corporate – High growth potential necessary Public Sector – Grants Bank loans – Typically small – Through Guarantee Schemes
- 12. Exploitation & Growth Financing Banks Business Angels Venture Capital
- 13. Sources of finance Equity Funds Venture Funds Vækstfonden – Guarantee Schemes and more Business Angels Seed Fund Own money Idea/Pre-seed Seed Startup Initial growth Expansion Re-structuring
- 14. R&D/Idea Startup Early growth Marketing Growth Maturity Private Equity 6 IPO Late-stage VC’s Revenue Non-Bank lending Factoring Early-stage VCs PROFITS Corp. Investors 4 INVESTMENT SIZE Seed Capital Founder Founders Grants Business Angels FFF TIME - 2-