Sooner or later, every startup project faces the question of financing. Financial means are necessary in order to put the idea into practice and develop products and services out of a concept that are ready for the market. But what options for financing actually exist for founders building up a business? We have compiled a list of the most important financial sources.
When founders let their own savings, material assets, and personal contributions flow into the business startup, we call this equity. One’s own starting capital can additionally be increased through financial support from a familiar environment (family, friends & fools).
In Germany, there is a number of funding programs for startup projects and the development of a business. Through these, founders receive supporting financial means from public institutions for a start to independence. Usually, the funding program decides on the purpose for which the funds may be used, such as for equipment and staff. You can search for suitable funds in the state’s funding database.
Wealthy private individuals who contribute to a business idea or a business through active support (know-how, business contacts) and/or with capital are called business angels. Usually, they support young startup projects during the buildup and beginning stage. In return, the business angel generally receives shares in the business. You can establish contact with business angels, for instance, in the business angel network of the CyberForum e.V.
Risk financers who invest in a business during or after the startup stage are known as venture capitalists (VC). Through equity financing, the founders receive borrowed capital and, in return, the financer receives shares and possibly rights in the business. Often, this form of financing is organized through investment companies or venture capital companies. For example, the KIZOO Technology Ventures is located directly in Karlsruhe.
In crowdfunding/crowdinvesting, projects and business startups present themselves on online platforms in order to gather outside capital from a crowd. The necessary capital is thus made available through a multitude of smaller investors. A difference is made between “reward-based crowdfunding” through donations, benefits, and counterperformances by the projects and “crowdinvesting” through participation models in businesses. Among the well-known German platforms are Startnext and Seedmatch.
Family offices refer to societies or special departments of banks, where the assets of mostly wealthy families are bundled and used for financing projects and shares. In addition to financial support, family offices can usually also use their business contacts to the advantage of a company.
Through bank loans, business founders can request a loan or funding credit from banks in particular for their startup plans. The banks decide whether to grant a loan according to their own criteria. The duration and amount of the loan is appropriated in relation to necessity. For example, the L-Bank (Baden-Württemberg) and the KfW (Germany) are active in the area of founder financing.
Are you asking yourself what financing option is the best!? There is no stock response to this question. The choice of financing means depends on many factors and should be looked at in detail and individually for every startup project. The founder consultants of the KIT Founders Forge help you in searching for the financial means that are suitable for your startup project.