I. Introduction
There are many options available for your search for funding. Money being the lifeblood of any venture, when setting up your project, it is essential to meet with key players in business financing.
Partners may use internal financing or turn to third parties and benefit from external financing.
Between finternal funding nd external financing, it is important to know that there are several options available to you when seeking financing to start a business. From equity capital to external investors, loans and crowdfunding wide range of solutions is available to you.
In this article, Vivinnov explains the different types of financing available for small and large-scale projects.
As a bonus, learn how to put together a solid funding application.
For your information, for your fundraisingdo not hesitate to call in a professionnal finance brokerYou definitely have everything to gain.
If you have any doubts about their usefulness, you can consult the article: Why get help with your fundraising ?
II. Internal funding
Simple solutions such as partners' equity capital, personal contributions or even love money can help you finance your business. This involves finternal funding .
Equity and personal contribution
With regard to the partners' equity capital and personal contributions, these enable the company to build up its own capital.
As a reminder, let us assume that we are in the start-up phase of the business. Equity capital is the amount of money that a person or group of people has invested in this business.
With regard to contributions, there are three main types : cash contributions, contributions in kind and contributions in industry.
Thus, personal contributions are the main source of funding when starting a business.
Beyond covering the initial expenses of your project, personal contributions are an important lever for securing new financing.
Special cases : self-financing refers to when your company only uses the resources it has internally (i.e. your capital and equity, and that of your partners, a portion of the profits generated and its cash flow).
Love Money
Another internal financing solution that is very popular with entrepreneurs is Love Money.
The aim is to ask your friends and family for a contribution to help you launch your business. This technique, which involves raising funds from those around you, can take the form of donations, interest-free loans (zero interest) or low-interest loans (very low interest rates).
III. External and mixed financing
To finance your project/business, there are various external solutions available for obtaining funding.
These solutions include: public aid and subsidies, subsidies from private organisations, loans, etc.
Public assistance and subsidies
Public authorities (whether local, regional or national) set up funds to subsidise businesses at any stage of development and according to their situation. European funding can also be sought.
This assistance may be financial or may take the form of strategic support tailored to the projects and needs of the company according to its situation.
In France, this assistance is provided by the State, local authorities and the public investment bank (BPI).
However, the assistance offered by local authorities varies from one region to another.
Among all the assistance offered by the State, the BPI or the regions, there are a multitude of different types of support (financial assistance, guidance, etc.) to help businesses regardless of their stage of development and situation. It is then up to the business to determine which type of support is best suited to its actual needs. The eligibility criteria for these support schemes are very specific and clearly defined.
Private support
In addition, private organisations such as associations, foundations and other bodies offer grants to help businesses. These include, for example, Réseau Entreprendre, ADIE (Association pour le Droit à l'Initiative Économique), Initiative France, etc.
Like public aid, private aid has numerous eligibility criteria that must be met in order to qualify for these grants. Furthermore, they do not only take the form of financial support, but also take the form of personalised assistance (advice, training, etc.).
It should be noted that applicants must have a solid case, as the criteria for receiving this assistance are very demanding.
Bank : the leading financial partner for businesses in France
Other sources of external financing include bank loans. As banks are the primary financial partners of businesses in France, loans are undoubtedly the most popular source of financing for individuals and entrepreneurs. Entrepreneurs will need to visit their bank several times with a solid business plan. It is up to the banker to assess whether your personal contribution and guarantees are sufficient.
In order to finance your business, various bank loans are available to you :
Short-term loans consist of :
- cash credits: overdraft facility, overdraft, seasonal credit
- and allocated credits: discount, Daily, factoring
Medium- and long-term loans, which include ‘traditional’ loans and finance leases: movable property, real estate
Crowdfunding
Furthermore, crowdfunding is now a lever for financing projects, via the crowdfunding and/or le crowdlending.
Seeking mixed financing
To increase your company's equity capital, you can also use venture capital. This is an equity investment in a company with a promising future.
Venture capital involves an individual or entity acquiring a stake in a new company with good growth potential, with the aim of realising a capital gain on the subsequent resale of the securities. Coin des entrepreneurs)
Venture capital consists of both investor clubs (made up of small groups of individuals who invest in the capital of small local businesses) and business angels who invest personally in the capital of businesses that are generally innovative or have strong growth potential.
In addition to financial support, they bring entrepreneurial and industrial experience to the table.
If you enjoyed this article, you will surely enjoy this one : 5 mistakes to avoid in your fundraising
To share :
Commencez à écrire ici ...