Bank loans, business angels, using your savings…? It is quite easy to get lost in the labyrinth of financing options for your startup, because as an entrepreneur, you are not expected to master the jargon of project financing mechanisms. So, how can you avoid getting lost in the maze of funding possibilities? In other words, what is the best financing option for your startup?
Personal funds: an (un)attainable ideal?
It is quite rare for a business creator to have the necessary funds to launch their project. Obviously, the amount of capital depends on your activity, and although most startups do not require exorbitant funds, some must quickly raise capital to support their development. Much like sharks, these startups risk suffocating if they stop moving, and therefore need significant injections of funds during the development phase.
The best way to finance your startup is undeniably to commit your own equity. At this level, various options are available to you: employee or collective savings plans (Perco or PEI), the ARCE mechanism (assistance for business takeover or creation) which allows you to unlock 45% of your unemployment benefits for business creation or takeover, family aid… In any case, committing your own funds has the advantage of freeing you from the weight of scheduled loan repayments, which can quickly become burdensome or even paralyzing.
Loans vs. crowdfunding: traditional financing has competition
For a long time, bank loans were considered the only serious alternative for financing a project. Now, alternatives that are as innovative as they are unconventional exist in the innovation financing market. Naturally, banks are following suit and now have teams dedicated to financing innovation. However, bank loans are conditional on having significant guarantees and equity. Nevertheless, thanks to Réseau Entreprendre and Initiative France, you can access zero-interest loans. Furthermore, in the context of Fintech development, crowdfunding is becoming increasingly used to raise funds. Several startups have taken the plunge into crowdfunding, which allows, among other advantages, for intensive communication about the project. Several dedicated sites and various forms of crowdfunding are available, such as crowdinvesting or crowdlending. It all depends on the financing formula that interests you. And if that doesn’t work, you can always turn to a “business angel“. This financing option is very common in the startup world, as expert investors are constantly looking for interesting projects to support.
And what about the State?
Although they can be of great help, public aid for financing your startup should be considered as a complementary financing solution rather than starting capital. That said, certain schemes can prove extremely advantageous for financing a startup, as the State aims to promote entrepreneurship. This is particularly the case for the following schemes:
- The French Tech Grant, which is an aid that can reach up to 30,000 euros, intended for young innovative companies with real growth prospects. To benefit from it, the company must have been registered in France for less than a year and employ fewer than 50 people. Furthermore, if you are an individual wishing to apply, you must be sponsored by an organization that supports innovative projects, such as incubators or accelerators.
- Innovation Feasibility Aid (AFI) and Regional Innovation Partnerships (PRI) are two types of aid provided by Bpifrance with the aim of validating the feasibility of a project. The AFI is capped at 50,000 euros and comes in the form of a grant or a recoverable advance to encourage the company to innovate by assisting it in its RDI (research, development, and innovation) efforts. Additionally, the PRI scheme is a grant ranging from 100k to 200k euros, led jointly by the State and certain regions to validate the feasibility of an RDI project.
- Regional grants cover several areas of innovative business creation through schemes such as Innov’up in Île-de-France or the “chèque territoires d’innovation” in the Pays de la Loire region. These schemes vary by region, so you should contact the local CCI or Bpifrance, which is often a partner of the regions in providing business creation aid.
- Competitions for innovative startups, such as the i-lab competition, which targets promising concepts that can lead to business creation. This competition, funded by the Ministry of Higher Education and Research, grants a subsidy that can reach 450k euros!