For a startup, obtaining funds is vital to get started or to sustain your activity. This will allow you to hire or buy the equipment necessary for its proper functioning and development.
So how do you finance a start up? And above all, how do you find the right funding for your startup? We answer your questions. Microcredit and solidarity loans: financing your self-business.
What are the methods of financing a start up?
There are many solutions to finance your project and it is important to consider all of them to properly build your financing plan. Here are the main examples of start-up financing:
Self-financing: thanks to your own funds, you will be able to quickly test your startup idea on the market;
Love Money: when your project begins to take shape, you can try to delay the use of a bank loan by requesting funds from your relatives (your family, your friends) – this solution is all the more desirable as the funds are often loaned without interest;
Crowd funding or participatory financing: this is an interesting solution, especially if you want to create a “buzz” around your project or make it known to the public. The crowfunding for a start-up often takes the form of a gift, loan or contribution ;
Bank loan: this is a very classic solution that can be interesting if you have guarantees and an established business plan;
Public aid from the Public Investment Bank (BPI): this is done in particular through the granting of grants, seed loans or start-up incubators;
Business Angels: these are natural persons who personally invest in the capital of your startup with the expectation of making profits. A business angel is a kind of sponsor who is often a business owner or entrepreneur. In addition to his investment, he will be able to advise and guide you. In France they are grouped together by the France Angels federation and are estimated at around 5000 active members;
Venture capital companies: these are companies that finance startups in the form of equity participation. They invest the money that has been entrusted to them by other people. This method of financing is quite common in startups;
The first employees: this is the hypothesis in which the startup will offer its first employees to met success of the startup. They will then be remunerated with a lower salary but obtain shares in the company in return;
Investment banks: when your start-up starts to get big, investment banks can go public; anyone can then buy and revbuy shares in your company.
How we can find financing for a start up?
To find financing for your start-up, it is important to be prepared and adopt certain essential behaviors. In particular, it is essential to take the time to develop a business plan.
It is a central document to obtain funding for your startup because it shows the seriousness and viability of your project. In particular, it highlights your product, the target market, the competition, the financial forecasts… The aim is to attract investors.
It is also important to develop your network, which is going to be essential for your startup. This is called “networking”.
Having good contacts could greatly facilitate the launch of your startup, the more your network is extensive, the more your company gains in visibility and credibility. It is therefore essential to build and maintain this network permanently.
Are you about to set up your start up? Also remember to find out about start-up grants! These are financial aid granted by the State subject to meeting a certain number of conditions. They allow you to accelerate the financing of your start up and reduce the cost of its launch. You can also consult our answers to the 10 most frequently asked questions on business creation assistance.
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