Financing your innovations: what options are there?

In addition to daily business, many entrepreneurs are constantly innovating products and services. Companies that do not innovate are, after all, doomed in the long term to be overtaken by competitors who do. But innovation costs money and, especially in the initial phase, does not yield any profit. Financing your innovations in a healthy way is therefore sometimes a headache file. If a loan from a bank fails or you do not want to take out it, you will have to look for external investors. You also have various options.

Family and acquaintances

With relatively small amounts, it may be wise to first consult your own network for investments. Family and friends are often naturally willing to help you. An additional advantage: uncle Joop will not immediately be on high legs if the return is disappointing. On the other hand, an investment, especially one of thousands of euros, can of course also change or risk your mutual relationship. Not everyone wants to take that risk.

Business angels

Business angels are 'normal' individuals who make it a sport to invest in innovative ideas. In addition to the prospect of a good return, they also think that investing is an exciting and fun activity. They invest in startups, but also in innovations at existing companies. They bring experience, make their network and knowledge available and often have a few tons to invest. Because of their experience and network, they are reliable, useful investment partners.

Venture capitals

In this interview, Johan van Mil of Peak Capital explains what he is watching: traction. His advice: pay attention when approaching investors Who you approach: every investor has his own 'sweet spot'. 

Venture capitals are similar to business angels: individuals with a lot of money to invest. The difference is that venture capitals often want to keep (some) control over an investment, for example through a majority stake in your company. They are more businesslike than business angels and invest purely for profit. You thereby give up some autonomy, but you get a critical, business finger on the pulse in return. That is also worth something.

Crowdfunding

Totally hip: start a crowdfunding campaign and let the public invest. This is particularly interesting for startups. There are few risks involved crowdfunding. Your investors are often directly your customers or fans. Crowd funders invest based on gun factor and are interested in innovative ideas. You often have to offer your crowdfunders an advantage (a free product or discount, for example) in exchange for their support. However, do you need hundreds of thousands of euros? Then crowdfunding is not ideal.

Business incubators

A business incubator can be useful for starting entrepreneurs: an investor who invests money for facilities (business premises, assets, training) and in return asks for promotion of his own services. Often you can also use the network of business incubators and they can put you in contact with other investors. A good first step for a startup.

Investment companies

If you really need a lot of money, you can get it together through investment companies. Countless investors, large and small, invest together in your innovations. The risk is thus spread for the investors. These investors often opt for the investment with the lowest risk and the most chance of (fast) profit. Multiple websites compare investment platforms where individuals can easily start with invest online. You will have to be commercially very interesting if you want to be able to convince investors to invest in your company. This is mainly reserved for existing, somewhat larger companies.