How can I raise funds securely for my start-up?

Who can help me?

“First of all, raising money is not a goal but a way to help you in your road to success. “ Recalls the attorney d’Oultremont

Is raising money a goal?

In the life of a company, raising money is an important step. For instance, it may allow entrepreneurs to hire their first employee, to buy an essential tool for the development of their companies or to hold until the break even if your start-up is cash consuming but with a high potential.

But it is not always the only solution, you can also invest in equity, borrow money from a bank, or have a minimum viable product (MVP) immediately profitable.

Raising funds means opening the capital of one's company so that people can take shares. This fresh money is then usable by the company, which also has a healthier and more reassuring financial structure than if it increases its debts. The value of the company's shares generally increases with a capital raising. It can be a goal if the final aim is to sell the company, but it helps the company when there is a strategy.

Who can help to raise money?

There are several actors in this field.

3F (Family Friends and Fools):
If your relatives believe in your project, they can invest in your company.

Business Angels:
Business angels can invest in your company, and they can also become your mentors. If someone knows your market very well, it can be a real asset if he/she invests in your company because he/she cares about your (and his/her) success.

Investment funds:

They are companies specialized in investment. Often willing to take risks, their objective is profitability, like any company.

Fund raising agents:

Specialized in fund-raising, they will help you find the investors. They usually bill you a flat fee and a success fee (percentage), depending on the size of your fundraising.

Your traditional advisors:
It can be your accountant, your lawyer, your mentor… They all can help you to take the good decision.

 

Of course, finding funds for your company can also take the form of an IPO or a crowdfunding, or borrow money, with different actors, 

 

How to secure my fundraising?

While you raise funds, you have new associates.
Have you thought about the voting rights of your shareholders ? Do you have a shareholders’ agreement ? It might be right the time to think about it and ask some important advice to your attorney.

Moreover, a lawyer will help you in the negotiation of the terms and conditions with the fund-raising agent if you have chosen one.

Entrepreneurs regularly underestimate these legal issues. It is important to note that it may be crucial in the event of an exit or new fundraising for example.

As every situation is different, being well advised can save you a lot of money, especially since there are now new online law firms that respond 24 hours a day.

Disclaimer: This article is merely written for information purposes and simultaneously at the time of publication in Belgium. Laws are likely to change over time, and to change depending on the region, so it is preferable to consult a lawyer to accompany you.

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