Fact sheet
Fact sheet
  1. During the start-up stage financing is primarily from:

  • personal savings
  • personal credit cards
  • personal loans of the entrepreneur
  1. At the growth stage, once the concept has been proven and the business is generating positive cash flow, the primary sources of expansion financing are:

  • commercial loans

  • commercial lines of credit

  • trade credit from suppliers

  1. Some of the key things which an investor is looking for in a startup is:

  • A very well elaborated business model showing clearly the break-even point and the revenue growth

  • A completed and well elaborated business plan where all parts are coherently presented

  • Entrepreneurs that are both passionate and motivated about their new venture, but also are capable to manage and lead it when it grows

  • Time and amount of the money required (debt of equity)

  1. The possible internal financing of a start-up business could come from:

  • Re-investing part of the profit

  • Sale of assets, or leasing rather than buying at start-up and buying used instead of new

  • Deferring salary for a certain initial period (also using family members who could also defer salary)

  1. Banks give credits for startup business based on the commonly used evaluation framework called “Five C’s of credit”1:

  • Character : assesses the  consumer’s willingness and desire to repay a loan on time.  The “know your customer” concept. 

  • Capacity : measures the applicant’s ability to repay the loan when it is due. 

  • Capital: the net value of a consumer’s assets.  This has a bigger impact with larger loans.

  • Collateral : an asset pledged by a borrower to a lender to guarantee a loan. 

  • Conditions : external variables that will affect the risk of the loan, such as the economy, social and political environment, government regulations, or competition, or changes in the bank’s objectives.

  1. When dealing with banks for obtaining a loan consider the following:

  • Banks do not like risking – they want their interest to be paid no matter how well (or poorly) your business goes.

  • Show the bank that you are realistic with the revenue projections and do not over-promise.

  • Talk the “language” of the bank manager – e.g. rations, returns, profit margins, etc.)

  • Establish a good credit history with the respective bank and if possible, personalized connection with the bank manager.

  • Be prepared to not get the loan, and include in your financial plan other alternative methods for the initial seed funding of your business.

  1. Before meeting an Angel Investor

  • Do your proper research to find the most relevant angel investors through angel networks, internet inquiry, associations, business consultants, and other resources.

  • Consider the industry branch and the business you are in, and the background of the potential angel investors

  • Get as much background information as possible about an angel investor before approaching

  • Prepare well in advance: be ready with an executive summery and a short and long-version of your business plan

  • Elaborate clearly your business model and be prepared to explain it well, including showing the growth potential

  • Prepare reference letters in case requested


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