Financing a startup is a major issue when creating a business . Indeed, in addition to the innovative project proposed by the startup, financial resources are essential to launch and sustain the activity. Fundraising therefore deserves special attention. To finance a startup , the entrepreneur must be able to present a solid project and defend it.
What is a startup?
Of American origin, the term “start-up” translates into French as “starting company”. Legally, there is no definition. However, a start-up can be defined as a young company with an innovative concept and strong growth potential . This particular form of business is based on a profitable business model that allows for rapid development of the structure. The goal of the start-up is to offer an innovative and unique product or service.
It is true that the start-up has specific characteristics , regulated in Article 44 sexies-0 A of the General Tax Code . However, it must opt for a legal status like any other company. However, given its rapid growth prospects, its creator will inevitably be forced to change its legal form in the future . Furthermore, the registration of the start-up is mandatory, notwithstanding its particular form.
How to succeed in your search for funding?
Before seeking funding for the startup, its founder must prepare a solid and well-reasoned case. Indeed, it is this case that he will have to present and defend to potential financial partners. Thus, to increase his chances of funding , the entrepreneur must:
Be confident and determined.
Please note : the funding requested for the startup should not be excessive. On the contrary, the entrepreneur has a better chance of obtaining financial support if the request is realistic and consistent with the return on investment objectives.
The 8 sources of financing for a start-up
Starting a startup without money is possible. However, the success of the project depends in part on the startup’s financing. In reality, there are multiple financing options available and they must be explored.
Self-financing
Firstly, the start-up can be financed by the contribution of the partners’ own funds or the individual entrepreneur. This personal investment can take the form of a cash contribution or a contribution in kind (tangible or intangible assets). However, this source of financing depends on the financial capacities of the partners. Indeed, as the definition of self-financing indicates , it is not possible to call on external investors. Other external financing alternatives can then be considered.
The love money
Startup financing can also come from family and friends. This is known as love money. Indeed, those close to you may want to invest in the business because they believe in the project. In this case, the entrepreneur can repay the loan interest-free and within a relatively flexible timeframe.
However, relatives should be clearly informed of the risks of this loan . Indeed, they must be aware that they may never see their money again if the entrepreneurial project fails. Bank loan
Bank loans are a classic financing method . However, they are not the easiest source to obtain. Banks generally require a minimum equity contribution from the startup founder before granting them a business creation loan .
In addition, the entrepreneur must be able to present sufficient guarantees . Otherwise, the loan application may be refused. Furthermore, the main disadvantage of this source of financing is that the repayment of the loan is subject to the payment of interest and must take place within a specific time frame.
Crowdfunding
Crowdfunding involves entrepreneurs presenting their startup project on an online platform. This financing method relies on convincing communication . If the project is successful, investors may provide financial support in the form of a donation, loan, or financial contribution.
Business angels
Business angels are private shareholders who participate in the financing of a startup. They are trusted individuals who believe in the project’s potential. Beyond the financial investment, these sponsors support and guide the entrepreneur in the creation and development of their business.
Private business incubators
Business incubators , also called business incubators , provide financial support and guidance to start-ups. They provide financial assistance for business start-ups and advise them on their creation and expansion, making them a valuable source of funding for start-ups.
Start-up competitions
Innovative companies also have the opportunity to participate in competitions. This is another option for financing a startup, as it’s possible to receive a financial contribution at the end of the competition. In addition, these events allow entrepreneurs to meet potential investors and gain visibility.
Public aid for business creation
Finally, the start-up creator can benefit, under certain conditions, from business creation aid . Indeed, he can benefit from the ACRE , the ARE if he is unemployed, but also from tax and social aid such as the research tax credit (CIR) or the innovation tax credit (CII). In addition, there are a certain number of innovation aid programs offered by the BPI in collaboration with French Tech.