Start-up financing for advanced students

After founders have laid the foundation for their new company in the seed phase, the start-up phase follows. Here they can hope for venture capital for the first time - but they have to keep a few things in mind.

If everything goes according to plan, founders in the seed phase have already found their first investors

. In the subsequent start-up phase, the aim is to bring the own product or service to market maturity. This stage usually begins with the official founding of the company. From this moment on, founders typically need more money. At the same time, however, capital providers already have higher requirements.

For founders, for example, it is now a matter of setting up a much more mature financial plan than in the seed phase. This should be at least three to five years into the future. Profit planning is also important. They should also consider tax and legal aspects.

As a rule, start-ups are still making losses in this phase. Usually, only outside financing comes into question in this phase, because founders often cannot raise the required sums themselves. External financing is particularly important in the form of equity capital, as this money, unlike a loan, does not have to be paid back. Venture capitalists are now becoming more decisive.

Public funds usually have to be repaid

There is a whole range of public funding programs that founders can rely on. In some cases, they have very different requirements. A good starting point for founders is the Existenzgründerplattform

. The Federal Ministry of Economics and Technology has listed funding programmes there. If founders look for a loan there, however, they have the disadvantage that they have to pay back the money - in contrast to money from a VC.

The important thing in that case is to keep the interest rate as low as you can. One way to get public money is through low-interest loans from the state development bank KfW. We have already looked at the requirements for these loans here. KfW also offers an entrepreneurial loan of

up to 100 million euros. Founders have ten years to repay it. The interest rate is usually between 1 and 2.12 percent.

Rely on venture capital to increase equity capital

How a startup can raise equity depends on its legal form. We have shed light on when which legal form makes sense here.

Basically, founders can raise equity either by increasing the participation of existing investors or by finding new shareholders.

However, both can cause founders to lose some of their entrepreneurial independence. At the same time, experienced venture capitalists can also help them with tips - a big advantage, for example, compared to crowdinvesting, which only makes sense for startups in very few cases

.

In Germany, there are a variety of investment companies that can be considered for founders. There are public ones like the High-Tech Gründerfonds as well as private ones, which make up the bulk of them. The whole thing can be divided even further, for example into business angels or venture capital funds, even large companies often have an investment vehicle.

VC investors can either take an active part and thus participate in the management or enter into a silent partnership. In return for their participation, they receive share rights. For founders, it is therefore important to weigh up carefully whether the respective VC investor is a good match for the company, whether he prefers a dormant or active participation and how high the company shares should be that he is prepared to hand over. The Bundesverband Deutscher Kapitalbeteiligungsgesellschaften (German Private Equity and Venture Capital Association

) has listed its members. There, for example, founders can search for a suitable financier.

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