AngelList is good for raising seed capital
Can I start my own business without equity?
These “corporate angels” can be seen as mentors who can also help you with the necessary start-up capital. However, it doesn't have to be that they will give you money yourself, but they will help you find a way to get the money you need. There is a business angel network in Germany.
Partner (contributor and silent)
Another very popular method of financing is the good old business partner. There are two different types: the silent partner and the cooperative partner. Silent partners just want to invest money and then have reports and figures on the start-up and all activities. However, they do not have a say, which is why they are also called silent participants.
At participating partners it looks different. They will definitely have a say in your start-up, which doesn't always have to be negative. For example, if you only know your way around developing products but have no idea about marketing, accounting, sales, or other tasks, the contributing partner can take over these tasks. In this case, special attention should be paid to the contract so that there is no rude awakening later. Now the question arises: where and how do I find a partner? There are certainly more than enough people who find your business idea promising and would like to participate in it. It's easiest to convince your friends and relatives because they already know you well. Banks or savings banks can also be partners. But it makes the most sense to look around for possible partners at startup trade fairs and similar events. Be it that you can pitch your idea there, i.e. present it, or simply get into conversation with potential interested parties. If your idea is creative and innovative, some stakeholders are sure to take an interest in it and listen to you.
Start-up capital from friends and relatives
If you want to start your own business without equity, you can of course borrow the necessary start-up capital from friends and relatives. It is certainly not always easy to ask, but it is very likely that this will be the quickest way to get the money. Even if you are dealing with acquaintances in this case, it is advisable to conclude a contract, regardless of whether it is for 1000 or 100,000 euros. It is best to make the contract with a payment-free start-up period (for example 6-12 months) and all other important points should also be stipulated in it. But always be careful when doing business with friends and relatives, as many friendships and families have already been broken through doing business together.
Venture Capital - Private Equity
This is a risk capital of companies and private individuals.
“Private equity” comes from the Anglo-Saxon language and represents private equity capital. These are investments (equity capital or other related forms of financing) in companies operated by professional investment companies. The investments are usually made through a fund, with a specific investment objective and limited duration.
The investors are very often active co-owners. Mostly they have a certain know-how in running companies, especially in the field of management and sales. However, they also require meaningful reports and increased transparency. Investors use the reports to see whether it is possible to reach an agreed milestone. Reaching a milestone is very often the prerequisite for a further round of financing.
The early stage financing of a company is also called Venture capital designated. Venture capital companies help young companies by investing in a venture capital fund. Most of these funds specialize in one or more sectors. By investing a capital, the venture capital investor becomes a co-partner and also has all the associated obligations and rights. While it is often suspected, venture capital investors do not acquire the bulk of a company. They insist that the start-ups have a majority.
Conclusion: Can I start my own business without equity?
It is not easy, but it is entirely possible to start your own business without equity. This is a tough path that will require very good perseverance. Always take enough time to think through the various financing alternatives before making a decision. It is important that you always have sufficient reserves in case the business idea does not go as planned.
If you should decide to take out a loan, it is best to set up a repayment plan and calculate the repayment into your monthly expenses. One possible way of obtaining the necessary capital is to obtain a loan from KfW's StartGeld. Depending on the business model, crowdfunding can also be very promising.
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