Eighty percent of the risk-bearing capital for start-ups comes from friends and family Venture capital Nine providers of risk-bearing capital 1. Friends and family Eighty percent of the risk-bearing capital for start-ups comes from friends and family. Often, amounts up to 50, 000 guilders are paid out
Eighty percent of the risk-bearing capital for start-ups comes from friends and family
Nine providers of risk-bearing capital
1. Friends and family
Eighty percent of the risk-bearing capital for start-ups comes from friends and family. Often, amounts up to 50, 000 guilders are paid out. The advantages are that you can get money quickly and there is confidence in the entrepreneur in advance. There is also a tax benefit for private individuals who provide capital for starting entrepreneurs: the amount (at least five thousand guilders) is exempt from wealth tax under certain conditions. This scheme was called the Aunt Agaath scheme, but the name has since been replaced by 'investing in venture capital'. The regulation does not apply to spouses, cohabiting partners and persons who have jointly set up a company. The disadvantage is that if the company fails, the delicate family relationships can be disrupted.
2. Business Angels or private investors
Business angels are investors who invest around 30 percent of their risk-bearing capital in start-up companies. The amounts invested vary from 68, 000 to 680, 000 euros. Often these are former entrepreneurs who (can) contribute knowledge in addition to money. Although they become co-owners of the company, they often do not sit on the entrepreneur's chair. Private investors are often poking for innovative projects that formal investors find too risky. Important is the personal contact between the entrepreneur and the business angel. The NeBIB advises entrepreneurs to ask financiers who want 51 per cent share or control in advance, pay a salary or fixed fee, do not want to deliver goods or services, or only show interest in returns and whether taxation turns out to be right away.
Incubators are the nurseries for new entrepreneurship. They offer the entrepreneur a combination of seed capital, housing, contacts and management support. Not all incubators have their own funds. Some are often little more than managers of collective buildings.
Incubators are useful for the initial phase of a company. Unfortunately, due to the deteriorating economic conditions, many incubators have been in trouble themselves: initiatives such as Kickstart Ventures, Idealab, Doublespace Europe, Composite Valley Ypenburg (TCY), The @Centre (Maastricht Center for Internet Excellence), Ipotentials and Webtower have ceased, or have closed their (Dutch) branches.
4. Corporate Venturing
A new phenomenon is that large consultancy firms such as McKinsey and KPMG provide incubator facilities to companies. With that calls that corporate venturing. The activities are not completely devoid of self-interest. The advisory firms hope that the starters will eventually purchase services from them. Money is not always provided; McKinsey offers counseling at a company office in Amsterdam against payment.
5. Investment companies
Investment companies are companies that usually have more money than informal investors. It is not unusual for a hundred million guilders or more to be put into an enterprise. On the other hand, these companies manage money from large investors and will not take any risks. Private equity firms are not starting out with starters so quickly. At least two million guilders are invested. Some venture capital companies, however, do focus on early stage developments. There are also investment companies that focus on the region. It is controlled remotely.
6. Venture Capitalists
Venture capitalists are primarily private investors or investors, although the term is also used for private equity firms. VCs usually invest at least two million guilders in companies that have more or less proven their right to exist. For intensive guidance these investors usually have little time. Most VCs are profit-oriented, which is why they usually take a majority interest in the company.
7. Investment companies
Investment companies or Private Equity Funds are funds with large amounts of private money used to buy shares in companies. They are somewhat in the water of VCs, but do larger transactions. Here too, in general, few risks are taken.
8. Stock exchange
What was still the way to raise a lot of money quickly two years ago, now seems no longer a promising option. The stock exchange only seems interested in share issues from profitable companies. An IPO usually has the purpose of collecting substantial amounts. There are, however, also disadvantages, as the past period has clearly shown: listed companies seem to be completely at the mercy of investors. If they no longer see the company, the dream is often over quickly.
Starters are not entirely dependent on loans from private individuals or companies. They can also make use of various subsidy schemes and credit schemes. One of these is the technical development credit (TOK) of the Ministry for Economic Affairs. The emphasis is often on new technical developments.
Source: NeBIB, ABN Amro
Start-up costs? All costs incurred during the start-up period of a company or a project.
Subordinated loan ? Loan on which, in the event of bankruptcy or liquidation, reimbursement only takes place after all creditors have been paid.
Assets? The balance sheet items on the left-hand side of the balance sheet: the assets and receivables of a company.
Redemption capacity? The amount of money left over from the net profit (after depreciation and taxes) for repaying loans.
Depreciation? The accounting treatment of the depreciation due to wear and tear, price reduction, aging or otherwise.
(Aunt) Agate hull? A mortgage loan, especially intended for starting entrepreneurs and business successors. Nowadays the name is: investment in venture capital.
Balance? The overview of assets and receivables.
Bank guarantee? A guarantee issued by the bank, usually on behalf of a client or another bank.
Bank credit? Credit provided in any form by the bank, usually against collateral.
Guarantee credit? A credit guaranteed by the government for financing company equipment and / or increasing working capital.
Break evenpoint? Point on which costs and revenues are equal; there is no profit (yet) made, but no loss suffered.
Gross profit? Turnover minus purchases.
Business angel? Independent financier.
Cash flow? The difference between the gross profit and the expenses or costs / expenses that can be used to finance current expenses.
Cash management? The management of the cash flow of the company (also called the liquidity flow), with the aim of cost savings, risk reduction and / or efficiency improvement.
Limited partnership? An enterprise of at least two persons, one of whom is the managing partner and the other the limited partner.
Current ratio? The ratio of current assets to current liabilities.
Discounted cash flow? Profit potential of an enterprise, calculated from the difference between the positive and negative cash flows, adjusted in time and adjusted for interest and risk. Not applicable for starters.
Dividend? The part of the profit distributed to the shareholders of a company.
Go ahead? Term often used to designate the first important growth phase after the start of a business or continuation after a (near) bankruptcy.
Equity ? The balance of assets (assets) less liabilities (liabilities) as stated on the balance sheet of a company.
Operating budget? A budget of the costs and revenues of a business activity.
Exploitation overview? Overview of the costs and revenues of a specific business activity.
Bankruptcy? An attachment by the court of the capital and all income of a debtor who has ceased to pay. After liquidation of the assets by the receiver, the proceeds are distributed among the creditors.
Financing mix? Using different forms of financing that together adequately meet the credit requirement.
Financing plan? Plan indicating how the financing of a company or a project is completed.
Financing structure? The way in which the various asset components of the company are financed.
Franchising? An agreement whereby a franchisor gives an independent entrepreneur (franchisee) the right to use the brand name, brand or production method of that franchisor against payment.
Guarantee? The total assets (share capital, subordinated loans, reserves, etc.) of a company, which offer creditors the guarantee for compensation in the event of bankruptcy.
Goodwill? The ability of a company to achieve an extra turnover or profit, usually based on an advantage in knowledge, organization, reputation or customer loyalty. If goodwill is paid for the acquisition of an enterprise, this is made visible on the asset side of the buyer's balance sheet under 'goodwill'.
Intangible assets ? The non-physical assets of an enterprise, such as goodwill, patents and patents.
Insolvency? The inability to pay debts.
IPO? English designation for IPO.
Annual plan? Plan in which the company objectives for the coming (calendar) year are laid down.
Financial Statements ? The balance sheet and the profit and loss account with the notes that an enterprise is required to draw up after the end of a financial year.
Key figure? Relationship figure indicating a connection between two business economic quantities. Key figures provide insight into the current situation of the company as well as in its development. Important key figures are, for example, solvency and profitability.
Short-term credit? A credit with a maximum term of two years.
Credit? Loan that a lender makes available to a borrower under the condition of repayment and usually against payment of interest.
Long-term credit? A credit with a term of ten to twenty-five years.
Liquidation? The dissolution of a company by selling the assets.
Liquid assets ? Directly available cash, cash in cash or directly available on a bank or giro account.
Liquidity? The extent to which an enterprise is able to meet the current financial obligations.
Liquidity shortage? Shortage of liquid assets (payment scope).
Market value ? The value of the shares issued by the company or a fictitious price that is realistic if there is an IPO.
Medium credit? Credit with a term of one to ten years.
Milestone? Measurable objectives that must be achieved within the business plan.
Net profit ? Gross profit minus costs.
Turnover speed? The speed at which the total money supply is spent in a certain period. At his English: burn rate.
Revenue ? The total amount of all sales.
Business plan (business plan)? Plan in which the desired development and objectives of a company are laid down and substantiated for a certain period.
Collateral? All forms of security that a debtor provides for the recovery of all that a lender has to claim from him.
Dissolution? Shortcomings in the fulfillment of an obligation may give the other party the right to dissolve the agreement.
Order portfolio? The whole of ongoing assignments.
Passiva? The debts of a company. These are listed on the credit side of the balance sheet. The debts are distinguished in short-term and long-term.
Profitable ? Profitable.
Profitability? The extent to which profit is made with the invested capital (revenues minus costs).
Income statement ? Profit and loss account: overview of the operating results achieved during a certain period (usually one year).
Risk-bearing capacity? The equity of a company plus any subordinated loans.
Balance management? Optimizing the cash position of a company, for example by compensating a debit balance on one account with a credit balance on the other.
Solvency? The ratio between equity and debt. Solvency indicates the extent to which a company is able to absorb any financial setbacks from its own capital.
Suspension of payment? Judicial suspension of payments of debts, regulated in the bankruptcy law.
Fixed assets ? Investments in which money is committed for more than a year (machines, equipment, real estate).
Company partnership (vof)? Collaboration of two or more persons (partners). The partners are jointly and severally liable for the debts of the company.
Venture capital? Venture capital.
Power ? The total possession of money, goods, rights and receivables after deduction of obligations.
Wealth providers? Persons / bodies that provide capital to an enterprise, including in the form of share capital (risk-bearing capital) or credit.
Current assets ? Investments that are converted into money within a year (stocks, debtors, etc.)
Debt ? The total of the debts contracted by a company.
Working capital? The amount that remains after having reduced the current assets of a company (cash, bank and giro balances) with the current liabilities (current liabilities).
Profit and loss account ? The state on which the revenues and costs of an enterprise are indicated resulting in a profit or loss (also: income statement)
Seed capital? Starter financing.