Tag of the Month: Crowdfunding

Prospective founders considering how best to realize their idea are often faced with the problem of how to finance it. Only few can cover the financial costs for building a business or first products with equity. Therefore, crowdfunding has become established as an alternative form of financing startup projects. But how exactly does crowdfunding work? Continue reading

EXIST – Higher funding rates for transfer of research

The “EXIST Transfer of Research” is, next to the “EXIST Business Start-Up Grant“, the program “Young Innovators” of the State of Baden-Wuerttemberg, and the “Helmholtz Enterprise” program of the Helmholtz Association, one of the major instruments to promote high tech spin-offs from the KIT. Therefore, we are particularly pleased to inform all interested of the new, improved conditions for EXIST Transfer of Research in force since December 9th, 2014.

The most important changes in the new funding guidelines, in particular the changes in relation to the nature, extent and level of funding, are summarized below.

Funding phase I

The funding period is generally up to 18 months. New: For highly innovative and demonstrably particularly time-consuming development projects with the express consent of the expert jury, a funding period of up to 36 months may be granted. For unplanned delays in development of the funding period, this may be extended by up to six months while maintaining the funding volume.

Eligible are:

  • Personnel expenses / costs for a founding team with a maximum of four members – consisting of the research team with three research assistants (or one of them a technician / laboratory assistant) and a person with business administration skills
  • Expenses / costs for student assistants and administrative expenditures / costs are basically eligible up to € 250,000 (previously € 70,000).

Funding phase II

Overall, in funding phase II a non-refundable startup grant of up to € 180,000 (previously € 150,000) is made available to the company. The startup company needs to finance the funding phase II with own funds in the form of equity of the founders and possibly equity in the ratio of 1:3 to the amount of the startup grant. The funding phase II generally does not to exceed a period of 18 months.

You can read detailed information on support by the EXIST business startup grant in the guidelines. For further questions the consultant team of KIT Innovation Management is at your disposal.

The basics of financing

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.

Equity

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).

Funds

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.

Business Angels

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.

Venture Capitalists

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.

Crowdfunding /Crowdinvesting

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

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.

Bank Loan

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.