This is where young start-ups get money

Those who want to realize their start-up idea often need outside capital early on. At the very beginning, founders can rely on business angels, incubators or government funding. A brief overview.

It is seldom the case that start-ups succeed in financing themselves solely from their own resources right from the start. Often, founders need money early on and even before the official founding. In doing so, they have a whole host of options.

Laying the foundation in the seed phase

The seed phase describes the time before the actual founding of the company. During this phase, founders work on their first prototype or flesh out their business idea. During this phase, founders should draw up a business plan, among other things . In it, they record their concept and provide themselves - as well as potential investors - with an overview of their financial planning. If they want to finance themselves later, for example through a bank loan, a detailed business plan is indispensable anyway.

In this very early phase, it is still difficult for founders to convince financiers. Many therefore often rely on their own deposits or capital from acquaintances. Those who do this should definitely document exactly who put how much money into the company and when. This should then make it clear who is entitled to what interest or how large their shares in the company are.

Inquire about ERP loans via KfW

If you would like to take out a loan at this early stage, you should take a look at which loans the Kreditanstalt für Wiederaufbau (KfW) promotes. The state development bank has three different types of financing on offerfor founders.

In order to finally receive a KfW loan, founders must turn to a financing partner. This can be a commercial bank or a financial intermediary, for example. This partner then submits the application to KfW. The development bank then checks whether the founder meets the respective requirements and, at best, grants the loan.

One of the three financing options is the "ERP-Gründerkredit - StartGeld". It provides up to 125,000 euros to finance running costs and investments. In addition, KfW assumes up to 80 percent of the credit risk. This loan is intended for start-ups as well as young and small companies.

The "ERP capital" of up to EUR 500,000 is intended to strengthen the equity capital of a start-up. Companies can apply for this money up to three years after their foundation. Within the first seven years, they do not have to make any repayment instalments, only interest payments. In addition, KfW assumes the credit risk completely. One prerequisite is that the company still has fewer than 250 employees and has a turnover of less than EUR 50 million.

The third product offered by KfW is the "ERP Start-up Loan - Universal". This is characterised by a reduced interest rate of 1.00 to 2.12 percent. With the help of this credit, founders should be able to make new purchases, such as for machines, company vehicles or software. Due to the Corona crisis, KfW has currently adjusted this loan. For start-ups affected by Corona, KfW assumes 80 to 90 percent of the bank risk. In addition, it waives a risk assessment for loans of up to three million euros in order to speed up the procedure. The prerequisite for this is that the start-up has only been active on the market for three to five years, can already present two annual financial statements and has only run into difficulties due to Corona.

The High-Tech Gründerfonds and incubators

If you are founding a technology start-up, you can turn to the High-Tech Gründerfonds (HTGF). The HTGF supports young companies with high growth potential, whereby the decision as to whether the HTGF invests in a start-up is made according to market-economy criteria. According to its own information, HTGF has already invested in almost 600 start-ups and has already had some successes. The fitness start-up eGym is part of the portfolio, as is Next Kraftwerke, the operator of a virtual power plant.

But young companies can also try going to an incubator. Incubators offer the advantage that, in addition to financial resources, they also provide infrastructure such as offices. The aim of these institutions is to support start-ups throughout the entire start-up process. Therefore, experts are often also on site, for example lawyers or business consultants. For founders, networking with like-minded people there can also be crucial. Which incubator is right for whom depends entirely on the individual case.

Business angels can become investors

Another way to get money is through business angels. These are often successful entrepreneurs who are willing to advise a start-up, provide contacts - and even invest initial venture capital in the project. Through them, up to 100,000 euros can be raised. In return, however, they want to share in the company's success. In return for your investment, a business angel therefore receives shares in the company. He makes a profit if he later sells his shares again at a higher price.

Founders should agree on three points with their business angel: how many shares he will receive, how long his investment will last and how much money he will invest. If you are looking for a business angel, you can contact the association "Business Angels Netzwerk Deutschland". It also lists all of its members, which can be viewed publicly.