The need to master business model design
Entrepreneur Alex Osterwalder's top tips for people starting out.
Start Up Kit
Forms of finance
24.02.2010
Basically finance for business comes in three different forms – equity, grants and bank finance. Before approaching the bank, it is a good idea to investigate the other forms of finance available to you. If you have organised other finance, you are more likely to be successful with any application to your bank.
One rough rule of thumb for finance for start-up businesses suggests the optimum finance mix is one third equity, one third grant funding and one third bank finance. However, it is becoming more common today for support agencies seek an equity stake in new businesses, rather than simple grant aid.
Equity is money invested in your business by you or by others in return for shares - it spreads the ownership, and possibly the control, over more parties. If you are considering outside investment, be sure to get professional advice and have a written agreement drawn up.
In general, the banks like to see you invest your own money in your business - it shows your commitment to the business and reduces the overall level of bank debt needed for future growth.
Other possible sources of grants and funding include:
- Enterprise Ireland
- City & County Enterprise Boards
- Venture Capital.
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