Without money, realizing business ideas and running a company is challenging. That’s why, at Science Park, we invest significant effort into creating opportunities for our businesses to secure capital and investments, enabling them to grow and flourish. Here, you’ll find all the information on how to finance your business idea and company.
There are various ways to finance your business. Either you have all the money yourself – and then, of course, it’s straightforward – or you need to find a combination of your funds and others.
It’s rare to find all the money you need from someone else. External financing options generally include loans, support & grants, and venture capital, each playing a crucial role in fostering growth.
Securing a bank loan or business loan is a common method for financing a startup or an investment for growth. Banks and organizations like Almi are the primary lenders for initiating a business. To qualify for a loan, you must demonstrate that your company stands a good chance of repaying the loan within a reasonable timeframe. The bank might ask for something valuable as security in case things go south. This introduces a risk that you should think about carefully because the repayment demand can put a strain on your company’s cash flow.
The benefit of loans is that they’re pretty straightforward. The bank is happy as long as it gets its money back through interest and repayments, without interfering in how you run your business. You also don’t have to give up any ownership of the company. A bank loan doesn’t consider whether the company’s investment is profitable or not, meaning the company takes on all the risk for the current investment. In this context, Almi becomes a crucial partner at the startup stage. They can take on a higher level of risk compared to banks and place greater emphasis on your idea and entrepreneurial drive.
In the startup phase, assistance and grants can come in the form of scholarships, winning a business idea competition, or securing funds to develop a prototype. Support and grants received do not require repayment, but the application process is necessary, and there is often a reporting requirement on the outcomes. Almi offers various forms of support for those with ideas for new products and services they wish to develop. Entities like Vinnova, the Swedish Agency for Economic and Regional Growth (Tillväxtverket), and other agencies frequently announce targeted calls for different industries and purposes. Additionally, there is a diverse range of scholarships and competitions that, if won, can provide both financing and visibility. For more information on public support and grants that you can apply for, visit verksamt.se.
Investments made by individuals and companies in your company in exchange for an ownership stake are commonly referred to as venture capital.
Venture capital investors can be categorized as either active or passive owners. Active owners often take a seat on the board and actively contribute to the company’s development, while passive owners view the investment primarily as a capital placement. Venture capital investments are characterized by high risk but are expected to offer substantial profit opportunities in the future. Investors seek companies with significant growth potential that can rapidly develop, leading to increased value or dividends for shareholders.
Individuals who invest in this manner are typically known as business angels. With the support of a business angel, you not only gain the necessary funding but also access to new skills and a broader network. To attract venture capital, it’s crucial to demonstrate your company’s substantial growth potential and promising profit opportunities. Effective presentation skills are also essential. Persistence is key because finding the right partner may take time.
Tips: Science Park assists you in refining your pitch – discover more details here.
If you’re uncertain about how to attract investors for venture capital, here are five tips for those seeking venture capital.
Science Park has established a robust national network of investors and venture capital firms. We actively participate in two regional investment companies – Speed Capital and Spectria Invest – and manage a regional investor network.
As the initiator and co-owner of the investment fund Spectria Invest, Science Park Jönköping county invests between 1-10 MSEK in regional growth companies with a verified business model and strong development potential. The fund contributes to your company’s development through both capital and active ownership.
Science Park operates the subsidiary Speed Capital AB, which can invest between 100,000 – 300,000 SEK in growth companies in the county. This is done in close collaboration with the Growth Foundation in Jönköping county (Tillväxtstiftelsen), and the investment is linked to companies participating in Science Park’s incubator program.
Our investor network brings together individuals and companies across Jönköping county interested in investing in growth companies. Members of the investor network receive ongoing information about investment opportunities and invitations to special investor evenings where Science Park companies seeking financing present their ideas.
Would you like more information or a discussion about the financing method that best suits your company?
Schedule a meeting with one of our business developers – it’s free of charge and confidential.
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