You’ve taken an important step in developing your start-up: product-market fit! It’s time to accelerate and grow your business. Often, this involves financing. But before you dive into applying for subsidies, reaching out to investors, or talking to the bank, it’s important to think about which type of financing best suits your needs.
Three main paths:
Subsidies: Primarily aimed at the development phase of your product, and sometimes the commercialization phase. The government partially supports your business plans, but you’ll often still need to cover the majority of the investment yourself. Additionally, the subsidy fund is limited, and every entrepreneur wants a slice, so you’ll want to maximize your chances by applying for the right subsidy.
Investors: Say hello to new shareholders! Investors bring not only capital but also expertise and their network. However, don’t forget—you’ll be giving up some control over your company.
Debt Financing: Think of a traditional bank loan or alternative lenders. With debt financing, you maintain full control, but there’s a price tag in the form of interest, and, of course, you’ll need to repay the capital later.
Make the right choice: The choice is not always black and white, and a combination is often possible. Be well-informed and carefully weigh the pros and cons.