Equity: the cornerstone for starting a business

Equity: the cornerstone for starting a business (Capital privado)

No business start-up without equity! No issue whether you bring your own funds into the newly founded company,

families and friends take an interest, you ensure the financing of your business thought with professional investors or choose alternative forms such as crowd investing: the advantages and disadvantages must be weighed up!

We also present alternatives such as media for equity and incubators and show which events are worthwhile for start-ups looking for investors.

Equity: business angel, start-up funds and so on.

For the majority of founders, their own savings are often the cornerstone and the only resource for financing business start-ups. Be that as it may, if additional money is required, the question arises how and under what conditions additional capital can be raised for your start-up or start-up.

There are basically two variants that you can check when financing: equity and obligation.

Obligation

Borrowing means getting money on schedule. The creditor, for instance, the house bank or the promotional bank,

provides capital, for instance in the form of a loan. In return, the lender demands interest and the opportune

repayment of the capital at a predetermined time. Lenders tend to be more risk-averse than equity providers

because you only benefit from the interest paid. For this reason, it is usually hard for start-ups to find

lenders.

Equity

Equity providers, such as business angels, are set against obligation capital . They don't require a fixed interest

rate or a specific repayment date. By participating in the company with equity, they become co-owners and

therefore benefit from a positive course of business. Equity providers generally have a say and often also bring

their know-how to the company.

There are a number of possible sources of equity that can be considered when starting a business, such as

convertible loans , venture capital or crowdfunding . It is important that you first find out enough about the

respective equity option so that you can then weigh up the advantages and disadvantages.

We also give information on where to find investors and how to convince them with a pitch deck .

Financing strategy

Equity for start-ups: a diagram of various forms

Bootstrapping: Starting your own business only with your own money

The term bootstrapping, which comes from Anglo-Saxon, describes what is presumably the most ambitious form of

financing using equity capital: it is tied in with starting a business that is managed solely independently. You

can find over here what should be considered with this equity financing, for whom a bootstrapping strategy is

suitable and where the opportunities and risks lie.

Equity through friends and family

Relatives and acquaintances often support the founders by making equity accessible for starting a business.

Be that as it may, caution is required here, as this can also result in an obligation guarantee. It might be advisable to arrange a loan.

Accelerator: support and equity to kick you off

Accelerator programs are often restricted start-up aids for start-ups organized by venture capital providers or companies. The focus is not on capital allocation or support with equity capital, yet rather support with infrastructure and know-how. Toward the end of the accelerator program, there is often a pitch with the thought in front of investors. We have assembled some accelerator programs for you to find equity (préstamos particulares)

Incubator: a strong, long-term partner

An incubator combines elements of a business angel and of venture capital companies and accelerators. In addition to equity financing, the start-up is also supported operationally and personally by the incubator.

Incubators are often alluded to as company builders because the company is grown together. Peruse here which

incubators support start-ups with equity .

Hiking Darlehen

The convertible loan is an interesting mixture between equity and obligation. Especially for companies that need money rapidly and easily. A private investor shoots money into the company and converts it into company shares after

the expiry. In the event that the start-up can take care of the investor, he will take care of the loan with interest.

Crowdfunding and crowd investing: equity capital from the crowd

Crowdfunding and crowd investing represent a totally new and interesting method of raising equity for business

start-ups.

Crowdfunding is about a generally small amount of equity, yet you don't get a new co-owner. With crowd investing, on the other hand, the crowd provides equity capital in the six-figure range yet additionally benefits from the positive business development. Special platforms help you to gather equity through crowd investing.

Business Angel: Private equity supplier

A business angel is a well off private individual who participates in a young company with equity. In addition to raising equity, a business angel usually supports the young company with the know-how and its network. Equity for bigger financing is often raised in a so-called club bargain by several business angels. Business angels are often organized in networks.

Family Office: Equity of well off families

A family office manages the capital of very well off families. A couple of these affluent families also invest

in young companies. A family office is therefore a special kind of business angel. Finding a family office as an

investor for equity for starting a business is not going to be easy. Nonetheless, on the off chance that you have found a well off family

as a co-investor, this can open up totally new opportunities, because the family office network is usually

incredibly strong.

Private Equity: Professional equity capital

The Anglo-Saxon term private equity describes investments (mainly equity) that are made by professional

investors in unlisted companies. The field of action of private equity is enormous. Investments include

companies in the start-up phase (so-called venture capital), yet in addition in the development phase in companies that are

in a crisis and are looking for capital for the turnaround. Be that as it may, the investment sums are especially high.

Anyone considering participation by a private equity investor should inform themselves well beforehand about

private equity and the possible new co-owner.

Venture capital: venture capital for your start-up

Private equity refers to the participation of professional investors in a company. Investments are made by means of a the fund, as is customary in the industry. A sub-form of private equity is the venture capital relevant for start-

ups, in which professional investors partake in companies in the start-up and beginning phases with equity. The venture capital companies can differentiate between three different types of venture capital investors.


Financing through equity: the amount differs extraordinarily from investor to investor

Media for Equity: no equity, however advertising spending plan!

Instead of an investment in the millions in the form of equity, advertising is the focus of the Media for Equity investment. In return for shares in their company, start-ups get extensive advertising services on TV, radio or in newspapers. This is especially interesting for start-ups that have a huge advertising financial plan anyway and need to rapidly generate reach: more about Media for Equity .

Grants: special kind of equity

A special sort of equity capital is grants that are used to support business start-ups. Despite the fact that the amount of the grants is generally moderately manageable, they don't earn interest and often don't need to be reimbursed. On the off chance that you are looking for grants, you can do the funding check.

Events for startups

Business angels and venture capital providers are often hard to access for founders and start-ups. There are numerous events all through Germany to encourage contact with investors. We have assembled a review of events from Hamburg to Munich where you can meet investors, other founders and important partners in search of equity: events for start-ups.

The elevator pitch: this is the way you convince investors

You have an elevator ride to convince the investor of your business thought and to win start-up financing ... this

is the concept of the elevator pitch, which is often used at events so that start-ups are in front of investors within from 3 to 5 minutes.

Corporate finance: FK/EK proportion

In connection with financing business start-ups, the question often arises as to how much equity should be raised in relation to obligation; it's about the privilege corporate finance .