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Company formation: possibilities of financing

In the run-up to the founding of the company, many start-up entrepreneurs and young entrepreneurs are faced with the hurdle of financing the project. The possibilities to get start-up capital are varied, ranging from own resources to support from incubators.

Given the high requirements for taking out loans, equity plays the most important role in starting a business. This can be obtained from a variety of sources, taking into account the relative merits and risks of financing.

1. Debt financing

1. Debt financing

The traditional way of taking out a loan with a bank is often not very promising for many start-up companies. banks:

  • set high hurdles for the granting of loan sums
  • are often not convinced by good business plans
  • demand high collateral

Accordingly, there are a variety of potential grounds for refusal on self-employed loans that are difficult to circumvent.

Short-term credit

An alternative for this is the loan form of the short-term loan for entrepreneurs and entrepreneurs. Here, the focus is rather on smaller sums of up to € 10,000. As a result, short-term loans can also be a useful supplement to other forms of financing, for example, to bridge short-term payment bottlenecks.

support programs

A large number of German research institutes have specialized in providing start-up assistance for young companies with various programs. Different industries are served with different concepts, including start -up competitions. The start-up capital, which is granted as part of funding programs, is partially repayment-free. Corresponding subsidies for company founders can be found for example in the form of innovation vouchers of the federal states or innovation subsidies of the Federal Office for Economic Affairs and Export Control.

2. Equity financing

2. Equity financing

Equity financing is possible in many ways, each of which bears its own opportunities and risks. This includes:

  • private grants from family and friends
  • accelerators
  • Private equity
  • Venture capital
  • Crowdfunding and crowdinvesting


In bootstrapping, the company is carried entirely by itself ( private assets ). This can come about from savings. The advantage of full control and lack of liabilities to third parties is the high risk of carrying the business project on its own. In addition to sufficient assets, such company founders have to show a high risk tolerance.

Business Angels

In so-called business angels, there are private individuals who, out of conviction, participate in a young company with their personal assets. Business angels not only contribute their equity, but often have a strong, industry-related network. With these contacts, they support companies as well as the know-how of the industry.


Similar to business angels but entrusted with additional tasks, incubators are also referred to as company builders. The Company Builder not only takes on equity financing but also supports the start-up’s core business operations. Also personal support by incubators is common.

3. Conclusion: a variety of financing options

Possibilities of financing young companies are almost as versatile as the business ventures. Company founders should know about the opportunities and risks inherent in the forms of financing and carefully evaluate in advance which form of start-up capital suits their own business plan.