The market is characterized by large, medium and small companies. Anyone who wants to newly enter the free market economy needs, besides the idea for founding a company, an investment in startups. The right financing makes the start easier, and at least three important financing options are available to profit-oriented founders if they can convince investors with their business plan.

Venture capital funds for new company founders

Investors with the necessary capital can invest indirectly in worthwhile startups through private equity. The fund, which holds risk capital, is meant to support new companies that have a good business idea. High profits for the founder after the start-up phase are an expectation that investors link to providing the risk capital. Only if the founder achieves the highest possible profits does the investment pay off for the investors. Many investors contribute investment in startups to the venture capital fund, and the best founder ideas win the award. Investors take a financial stake in several new ventures; the venture capital fund collects the investors' money and distributes it to profit-oriented founders.

Seed capital through business angel networks?

Investment in startups is possible through business angel networks, and in Germany the Federal Ministry for Economic Affairs and Energy is one of the contacts. Founders with convincing business ideas are advised on what the path to the desired application for equity capital looks like. Business angel financing is an option for a limited group of founders, because a niche in the market with prospects of high profits has to be found. Involving business angel networks in the planning in the early phase of the company's founding saves time. In many cases, possible capital approvals are not granted immediately, but only after some time of application processing.

Investing in startups



Crowdinvesting as an alternative?
Online platforms search on behalf of company founders for investors who want to put in smaller amounts. The first crowdinvesting financing project on one of the first crowdinvesting platforms was successfully completed in 2009. The extremely small volume of capital and the number of capital recipients have grown over the years. The crowdinvesting market has basically become an alternative when other investments in startups have failed. Looking for alternatives to the savings account, many crowdinvesting investors want more return, because interest on savings accounts is too low or isn't paid at all. High returns are possible for investors if the founder manages to establish themselves in the fiercely contested market. As the promised return rises, so does the risk of a possible complete loss of the deposit. Experts on investments in startups say that off-exchange asset investment platforms should work transparently with investors and founders, because there is no deposit insurance for investors.

  • New company founders must forecast realistic returns
  • Investors must be informed about the opportunities and risks of the investment
  • This risky form of investment comes with possible gains or high losses up to a total loss
  • The issuer's current annual financial statements are shown to the investor
  • Important information must be conveyed to the investor in an understandable way