4 Flashcards
Sources of Financing
1 equity
- emotional money (savings, friends, family, informal investors)
- smart money (business angels, venture capitalists)
- financial support (competitions, public funding, incubators, accelerators)
2 debt
- credit (banks, family, friends, informal investors)
- loans (banks, family, employer)
- obligations (banks, insurances, state)
Financial Support Side
1-4
1 business plans competitions (AC^2)
2 public funding (KFW, Invest)
3 incubators/accelerators (German accelerator, Startlab)
4 crowd (Kickstarter, companisto)
Public funding
dependent on Region (European, national, regional, local)
- inexpensive loans (KFW)
- grants / subsidies (invest, Exist)
- competition/prices (Deutscher Gründer Preis)
Important Questions for Public funding
1-7
local fist, then go broader (less competition)
- what are funding criteria? am i eligible?
- how much funding?
- do i expect coach/network?
- can i afford a loan or should i look for a grant?
- what conditions for funding?
- what is the timeline for program?
Incubators
- programs to support young entrepreneurs
- providing differentiating degree of support
- e.g. RocketInternet
1 coaching/ advice ++
2 financing ++
3 office space ++
4 office services (secretary) +
5 contacts +++
6 administrative services (accounting) +
Accelerators
- fixed-term, cohort based programm
- focus on mentoring, coaching, networking
- e.g. Axel Springer Plug & Play Accelerator
1 coaching/ advice +++
2 financing +
3 office space ++
4 office services (secretary) -
5 contacts +++
6 administrative services (accounting) -
Science & Technology Parks
- provide necessary infrastructure
- e.g. TechnologiePark Köln
1 coaching/ advice -
2 financing -
3 office space +++
4 office services (secretary) +++
5 contacts +
6 administrative services (accounting) +
Incubators and Accelerators: The Entrepreneurial Ecosystem
1-8
1 Moral (acceptance to “elite circle”, prospects and mentoring)
2 Financial (fund company or introduce to potential investors)
3 Network (networking events)
4 Government (help to acquire government programs)
5 Technology (own or partner technology specialists can help)
6 Market (usually have a certain market/industry focus)
7 Social (same environment as other founders)
8 Environmental (provide a fostering evironment and “freebies”
Incubators and Accelerators: Pro (4) / Con (1)
+ network, contracts
+ coaching, mentoring
+ ecosystem
+ (funding)
- loss of control / equity
Crowdfunding
Principle
Capital Seekers: entrepreneurs, artists, …
Capital Providers: anyone (the crowd)
Intermediary: crowdfunding internet platform (Kickstarter, Seedrs, indiegogo)
- capital seekers propose projects
- capital seekers reward equity
- capital providers contribute money
Variants of Crowdfunding
1-3
1 debt
- p2p lending
- social microlending
- regular debt
2 equity
- shares
- mezzanine: subordinated debt
- shareholder loan
3 others
- reward-based
- donations
Participants of Crowdfunding
1-4
1 capital seeker
- search for funding
- find the right investors
2 capital provider
- find interesting startuo
- get money/rewards back
3 intermediary / platform
- avoid fraud
- build good reputation
4 government
- avoid fraud
- build good reputation
Crowdfunding Campaign
Step 1:
Pre Campaign
Seeker
1 generate idea, develop prototype
2 consider financing from BA, VC, bank
3 choose CF type (reward based, equity, debt)
4 select CF platform and model (KIA vs AON)
5 prepare campaign (goal, timing, rewards, pitch)
Provider
1 screen investment possibilities
2 generelle idea to contribute to CF
3 choose appropriate CF model/platform
4 search for appealing projects (interests, expected return, geography)
Crowdfunding Campaign
Step 2:
Campaign
Seeker
1 launch pitch on platform
2 secure early contributions
3 conduct marketing/PR
4 post updates and respond to questions
5 close campaign, receive money, pay fee
6 thank contributors, inform about campaign success
Provider
1 investigate projects (screening, due diligence, interaction with seekers)
2 decide on amount of contribution
3 transfer money
4 decide on anonymity level
Crowdfunding Campaign
Step 3:
Post Campaign
Seeker
1 finalize and produce product rewards
2 inform capital providers of project progress
3 optional: crowdsource (know-how) from capital providers
4 ship rewards or realize investment gains OR close company (fraud, bankrupt)
5 optional: market comp. / products
Provider
1 optional: regular inform about progress
2 optional: interact with capital seekers, provide additional value
3 optional: receive reward / return
4 perform follow.on CF activates (further contribution, recommend CF)
