Start-up financing: Capital for the launch

A business start-up must be financed. As a rule, founders cannot finance a start-up project entirely themselves. They need support with financing. In principle, there is the possibility of financing through equity capital and the possibility of loan capital. Equity capital can be procured if you share the business shares with business partners who also contribute capital. For smaller business projects, the circle of friends and commercial banks come into question for financing. Savings banks have a good feel for business models and strategies for start-ups. Don’t just think of them as financiers, but use the dialog with your corporate client advisor to improve the business concept and thereby increase the chances of business success. In the case of growth-oriented start-ups, financing through business angels and, if necessary, also financing through private equity companies is a possibility. Loan capital is usually provided by bank loans.

When setting up, think not only about financing business equipment, but also about working capital for financing current assets. Your outgoing invoices will be paid with a payment term. You need to pre-finance the time period. Depending on your industry and product, your business process takes time to turn procured input materials into saleable finished goods. Depending on your business model, you may need a warehouse that you have to finance.

Financing this typical business capital tie-up is not a one-time occurrence; it is ongoing and even expands as your business grows. For this reason, you should try to cover such constant financing requirements not by means of a short-term current account facility, but by means of long-term credit agreements which provide you with financing security in the long term. The recommendation is to match maturities, i.e. to cover long-term capital requirements also with long-term loans.

In any case, you need a solid business plan for a third-party financing commitment. Business consultants who specialize in financing can assist you not only in finding funding, but also in identifying and accessing appropriate public funding programs.


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