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Funding/ Business Supports (Alternatives for Raising Money (Equity Capital…
Funding/ Business Supports
Why new ventures need funding?
Cash Flow challenges
Capital Investments
Lengthy Product development cycles
Alternatives for Raising Money
Personal Funds
Personal Funds
Friends and Family
Bootstrapping
Equity Capital
Partial ownership > cash
Venture Capital
Partnerships to pool money and invest in startups
Don't choose too many companies, looking for 'home runs'
Invest in stages - some specialise certain stages
Business Angels
Individuals who directly invest in startups
Typically ~50, high income, successful entrepreneur
Willing to make willingly small investments
Looking for 30-40% growth per year
Will invest 50-250k in a company
Difficult to find
Initial Public Offerings
First public sale of stock
Important milestone for a firm
Good way to raise funding for current/future
Raises public profile - More options for investment
Investors can recoup investment
Creates a form of currency to grow via aquisitions
Debt Financing (loans)
Alternatives
Vendor Credit
Factoring
Peer-to-peer lending
Crowdfunding
Creative Sources
Strategic Partners
Many are formed to share the cost of developing services / products
Older firms benefit by getting access to creative ideas and entrepreneurial spirit
Biotech firms partner with large companies to do trials
Firms get funding, partners get new products
Leasing
Written agreement to use land / building in exchange for money
Allows the use of assets without significant down-payments
Most require modest down payments and monthly payments
At the end of equip. lease you have 3 options
Buy the equipment for a fair market price
End the LEase
Renew the lease
Almost always more expensive in the long run than buying
Grant Programs
Business Supports
Enterprise Ireland
Manufacturing & Internationally traded services
10 people
Advice and support in 3 main areas
Tech innovation
Business Development
Internationalisation
Funding in 5 areas
Exploring new opportunities
HPSU - (export focus, 1.3m sales within 3 years)
Company expansion
Building international competitiveness
Research and Development
Support tends to be a mix of non-repayable grants and equity
LEO - Local Enterprise Office
Formerly City/County Enterprise Boards
Deals w/ businesses employing <10 people
Staff and board drawn from public & private sector
Provide advice/mentoring & training
Provide Financial support
Niche manufacturing / niche int. traded services
ventured promoted by long time unemployed
Tourism enterprises
Innovative projects from work in 2nd or 3rd level institutions
Synopsis of Financial Supports
Priming Grant (Refundable Capital)
50% of qualifying capital costs (up to €150K)
Grants in excess of €80K shall be he exception
Eligible costs incl.
Capital Costs
1st Year of salary
Rental accommodation
Utility costs
Marketing costs
Consultancy costs
Business specific training
Business Expansion Grant
Feasibility Study Grant
Up to 60% of eligible expenditure to a maximum of €20K
Eligible costs are innovation, research, consultancy and miscellaneous costs