According to official figures, the number of new business start-ups fell in 2017 compared with the previous year. One reason for this is the strong economic situation Germany currently finds itself in. Unemployment is falling and the number of people in work is rising. Compared with its European neighbours, Germany is faring better than was predicted just a few years ago.
Nevertheless, many Germans remain undeterred in their determination to set up their own businesses. First step: the innovative idea. Second step: the business plan. The business model appears to be viable. So, is it time to get started on setting up your own start-up? Far from it. Anyone wanting to set up a start-up needs one thing above all else: money. Founders who do not wish to bear the business risk alone can secure funding in various ways. We’ll introduce you to the best-known financing models, alongside crowdfunding and the traditional bank loan.
From start-up to large company: with limited say
A cash injection with a catch: before start-up founders set out to find investors, they should consider whether they are prepared to hand over their idea and a stake in the company to third parties. Investors ensure that substantial funds flow into the small business’s development and expertise. In return, investors gain a say in the business and often decide on the targeted timing of the exit. The latter refers to the investor’s withdrawal from the company, whereby they transfer their shares to third parties. With a bit of luck, this might even be to the start-up founder themselves – provided they have the necessary liquidity. Investors play various roles, particularly in the start-up sector: as incubators, accelerators, business angels or through venture capital.
Incubator
Companies that specialise in supporting young and, above all, promising start-ups on their path to success. The term ‘incubator’ refers to a breeding ground and very vividly illustrates the principle behind this collaboration. The start-ups are taken under the wing of the experienced company until they are ready to stand on their own two feet. They are then released for an exit. Incubators provide financial resources, offer advice and sometimes even supply the appropriate office equipment.
The best-known example: the Samwer brothers of Rocket Internet. The internet firm has achieved success by replicating foreign start-up projects. The incubator created hundreds of companies as if from a blueprint: including StudiVZ, Zalando and Home24. Many of these ‘chicks’ have long since faded into obscurity.
Accelerator
‘Acceleration’ is the guiding principle of these investors. Whilst they are similar to incubators, they differ primarily in terms of the framework conditions. They provide advice and ensure the necessary cash flow during the development process, but only within a period previously set out in a contract. These are, in fact, accelerator programmes – a sort of ‘boot camp’ for start-ups, in which they are equipped in the shortest possible time with all the knowledge they need to go it alone successfully. One company that specialises in such programmes is, for example, hub:raum. Established corporations are also getting involved with start-ups. Take, for example, the insurance company Allianz with its Allianz Digital Accelerator programme.
Business Angel
A brief detour into the esoteric: angels bring good luck and offer protection against all the dangers that might lie in wait on the path to success. So-called business angels are successful entrepreneurs who have already managed to build up and sell their own start-up. Business figures who use their own capital and start-up experience to give newcomers a helping hand. Their already extensive network also makes them particularly attractive to start-ups. Where can you meet business angels? Here, for example: Business Angels Netzwerk Deutschland e.V.
Venture capital
So-called venture capital firms are investment companies that invest capital in start-ups. They also provide expertise and ultimately profit from the exit. One of the best-known German venture capital firms is Earlybird.
An innovative business idea with a prestigious address
It all comes down to the business idea. After all, it is only with this that you can win over investors during your pitch. And with a prestigious business address. With our COLLECTION Business Centre in Frankfurt, Düsseldorf, Stuttgart, Hamburg and Vienna, you can lend your new business idea the necessary credibility and win over your investors for your project in a modern business environment. Make use of our office services – by the hour, by the day or over several years – and remain flexible and cost-effective in the process.
