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Crowd funding factoring invoices11/8/2023 ![]() ![]() The aim of subsidies/schemes is typically to stimulate entrepreneurship, innovation/R&D or economic growth within a certain geographical area. As an example, Dutch crowdfunding platform Oneplanetcrowd focuses specifically on sustainable projects with a positive impact.Įxplanation: A huge number of tax/financial schemes and subsidies exist. There are also crowdfunding platforms with a specific focus, so take that into account when making your choice. Think, for example, of consumer products. Since the people that invest via crowdfunding platforms are not always professional investors, crowdfunding is better suited for propositions that are not too complex or technical and that are easily understood by the general public (that’s why it’s called “crowd” funding). They are mainly suitable for products, projects or gadgets aimed at the consumer market and have a strong design element to them.Ĭonvertible loans have the following advantages: 1) no shares are being issued, 2) valuation discussions are postponed until the moment the value of a company can be better determined and 3) it is an easier, faster and cheaper process than an actual share transfer. Well-known examples of platforms offering these types of crowdfunding are Kickstarter and Indiegogo. Do you have a prototype available, and do you want to test the product/market fit, but you cannot finance the production/delivery of the first batch of actual products? Then go for pre-orders/donations. Are you looking for a loan, but having trouble securing one from the bank because your risk profile is too high? Then try loan crowdfunding. When to choose this source of financing: In general, there are three types of crowdfunding: loans, pre-orders/donations and convertible loans. Usually, crowdfunding is performed via an online platform where entrepreneurs offer investment opportunities on one side of the platform and on the other side of the platform, a large group of people invest small amounts to meet the entrepreneur’s investment need. With crowdfunding, the “crowd” finances the funding need of a company. When the invested amounts, share percentages and level of professionalism increase, then we speak of angel investing.Įxplanation: Nowadays, it is hard to imagine that crowdfunding once didn’t exist. Usually the amounts concerned with this type of investment are not too high and are typically repaid as a loan (with or even without interest) or are invested in exchange for a small equity share in the company. The advantage of this funding type is that it is a quick and cheap way of collecting cash, especially if you take into account the risk that the 3Fs take (which they are not always aware of themselves: hence, “fools”). When to choose this source of financing: This type of financing is often pursued to cover the costs of setting up a new company or to bridge the gap to a first round of (pre-)seed funding. As they are usually not professional investors, you should not expect a professional assessment of your company strategy from such an investor. These are often people from your family or social network who are close to you and mainly invest because they have faith in your idea or in you as a person/entrepreneur. Why would another person take the risk of investing in your company if you have never been prepared to take the risk yourself?Įxplanation: Before you start approaching professional investors, it might be worthwhile to try to raise some funding within your network of family, friends and fools. What is the advantage of this form of investment? It can be perceived as positive by an external financier that a founder has some “skin in the game” as well. In terms of investment size you can go all out (as far as your bank account allows you to). When a company is set up, in many cases, no revenues or external financing is available, yet there are always some startup costs to cover. ![]() However, you usually see this happening when the company has just been founded. When to choose this source of financing: Founders can obviously invest in their own company at any time. Temporarily not paying yourself any wage is also an option. Or, what about a founder making an office, machines or a technology license available? All of these are sources of investment. If a co-founder or partner invests his/her hours in helping you start your business while also working his/her own job, that is also an investment. Explanation: Do you have some savings left yourself? Did you just receive a nice bonus? Why not invest it in your own company! However, you don’t necessarily have to invest in terms of cash. ![]()
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