INNOVATION IN BUSINESS ENTREPRENEURSHIP MANUAL

MANUAL INNOVACIÓN EN EL EMPRENDIMIENTO EMPRESARIAL

4.1. Financing from private investors (Business Angels).

At the end of the start-up's first milestone (at the end of the second year or so?), if everything has evolved well, the company will have customers, sales and will be on the verge of positive EBITDA. The next growth milestone (complete the functionalities of the prototype, reinforce the sales team, carry out an on-line and/or off-line marketing campaign, etc.) will require new financial resources. Now the company is already a growing project, may have positive EBITDA/EBIT and therefore, although it is not yet eligible for traditional private bank financing, it may be attractive to private investors or Business Angels. In relation to Business Angels, a number of questions arise, which we list below, although they are not the subject of this course (we recommend a visit to the website of the San Francisco-based Keiretsu Business Angels Network ( www.keiretsuforum.com and www.keiretsuforum.es): • Who are they or what profiles do these Business Angels have? • how can the start-up have access to them? : Investment Forums • What is the process and how long does it take for a start-up to present at an Investment Forum? • How do Business Angels think and what are their investment criteria? • How can we value companies at such an early stage and therefore give Business Angels the appropriate share of the capital based on their cash contribution? • What other elements are considered critical in the entry of a Business Angel in the capital of a start-up? • what special care needs to be taken in the Partnership Pact? If all goes well, the company will start to turn a positive bottom line. It will now be easier to access bank financing to fund the next growth milestone as well as other potential funders such as Venture Capital that may come in at that time. In some countries, including Spain, legislation has been passed (Ley de Fomento de Financiación Empresaria, Law 5/2015 of 27 April, Title V of the Law) on crowdfunding and crowdlending platforms that can help finance companies in their different stages of development, especially equity crowdfunding platforms for start-ups.

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European Open Business School