Do you ever think about starting your own business? Definitely. Many Belgians certainly do and have actually taken this step. Belgium is no less than 5th in Europe in terms of the number of investments in a start-up. A large proportion of people do not have the financial means to set up a business themselves. Do you know what different options there are? We show the ways of a start-up financing.
There are different ways to finance your start-up. There are of course advantages and disadvantages to this. Below is an overview of the most common ways:
A possibility for your start-up financing is through your own savings. This is of course the safest and easiest way of financing.
Money from family and / or friends
There are different ways to request money from your family and friends. They can lend you money or they can buy shares in your company. If family or friends lend you money, they give a certain amount, which will be paid back later (possibly with interest). If you let family or friends buy shares in your company, they become co-owners. You do not have to pay them back periodically, but they do become the owner of your company and therefore hope to be able to share in the profit later. Make sure that this remains a minority share, so that you still have the highest word.
Business angels / venture capital firms
Business angels and venture capital firms are investors who dare to invest in young companies, where banks often do not yet dare.
Business angels are individuals, usually former entrepreneurs, who invest their own money in a start-up or scale-up (usually in the industry in which they have worked themselves). In addition to giving you money, they also give advice from their rich experience. A business angel can also strengthen your network and credibility. They usually do this in exchange for shares.
Venture capital firms also invest in young companies, but not with their own money, but with money raised from various investors. Venture capital firms can therefore often invest more than a business angel. In addition, venture capital firms often only invest once the concept has been proven and there is income. Business angels invest more often from the start.
Bank financing is one of the most common forms of financing for companies, but not evident for start-ups. Banks must be convinced of your business plan and be sure that your idea will generate money. In recent years, banks have certainly become stricter in granting loans.
Different grants in the region
It is also possible to qualify for subsidies in the region. It is certainly worth investigating whether you are eligible for one of these grants. For more information about some grants in each region:
- Subsidy in Brussels
- Subsidy in Flanders
- Subsidy in Wallonia
Apply for a loan
In addition to the bank loan that you can request with your company, there are also different types of loans that you can use for personal purposes, such as the personal loan. A personal loan allows you to borrow money without having to state what you will use the money for.
Crowdfunding is a new way of financing start-up financing. With crowdfunding, your start-up is funded by a group of stakeholders or associations that also believe in your project. You must therefore try to convince your (potential) investors of your idea. The amount that each investor invests can be low, but the idea of crowdfunding is that you attract money from many different stakeholders and build a brand identity at the same time. You can turn these stakeholders into customers in the future.
What the investors get in return can vary:
- Donations and rewards: investors donate an amount or receive a reward in the form of a gift voucher, tickets, a test package for your product, etc.
- Profit-sharing on the basis of turnover: investors receive a certain remuneration, depending on the turnover.
- Loans: investors lend money, which you repay over a certain period.
- Shares: investors receive shares in the company. They receive a share of the profit as compensation via dividend payment, but without giving one investor significant control.
At the moment there are different platforms for crowdfunding, where everyone can set up their own, innovative ideas and can raise money for his / her project. One of these is Kickstarter. This is one of the largest crowdfunding platforms in the world. You can come here for all kinds of projects, from dance and art to a technological project. Meanwhile, 978 million euros in money has already been raised through Kickstarter. Another crowdfunding platform is Bolero, a Belgian crowdfunding platform, founded by KBC.
The advantages and disadvantages of the various financing options
As you can see there are different ways to finance your start-up. You need to see which form of financing suits you best to make your start-up a success. Unfortunately, success is not guaranteed, but whoever does not dare does not win! We wish you every success with the start-up of your great project!