Having the necessary funds is key for your startup to grow. There are many different ways to obtain financing, and which one you choose depends on the stage of growth the company is in and the needs of the project.
💡 Remember. The capital required in each financing round is higher as the startup grows (seed, Series A, Series B, etc.).
Non-professional and small investors
‘Bootstrapping’. The process by which a startup grows without using external financing: it invests the funds it already has available and reinvests the income it obtains in the business. The main advantages are the maintenance of control of the company, the lower risk of not having to face a debt and the optimisation of resources. However, this model is not applicable to all startups.
- At what stage? Pre-seed.
‘Family, fools and friends’. Literally, family, fools and friends: the triad refers to the closest circle to turn to for the first steps of the startup.
- At what stage? Pre-seed and Seed.
‘Crowdfunding’. Financing model where small investors make small contributions to start a business in exchange for rewards (e.g. exclusive access to the solution and product).
- At what stage? Seed.
Examples:
‘Equity crowdfunding’. A method whereby small investors acquire shares in the company in which they invest. Unlike crowdfunding, they become owners of the equity share in the company and can earn a return on their investment.
- At what stage? Seed.
Examples:
Professional sources
Venture capital. A form of financing where the capital invested in a startup with high growth potential is received in exchange for a share in the company. These investors are usually part of specialised investment firms.
- At what stage? Early Stage and Growth
Examples:
Business angels. Individual investors who invest their money in emerging companies in exchange for an equity share. Generally, they serve as mentors by putting their experience at the service of entrepreneurs.
- At what stage? Seed and Early Stage.
Examples:
Incubators and accelerators. Organisations that help startups implement and drive their business model by providing services and support.
- At what stage? Pre-Seed and Seed.
Examples:
Support from public institutions. Some administrations have specific programmes to support startups through subsidies and grants.
- At what stage does it appear? Seed.
Examples:
The role of banks
Banking institutions are important allies that support and encourage you to launch your startup. Their involvement can provide you with both the necessary advice to meet the objectives set and different financing products:
- Venture debt. Loan designed so that your shareholding is not significantly reduced. The majority of this credit is made up of debt that is repaid with interest, while a small fraction is oriented towards the acquisition of shares in the startup.
- Growth loans. Loans intended to finance growth in the company’s most advanced stage. It appears in series C, D financing rounds or when your startup undertakes investment projects to expand into new markets.
- Capital lines. Financing instrument that allows venture capital to increase liquidity and accelerate the investment process in your startup. It serves as a guarantee of capital commitments for the fund’s partners.
BBVA Spark, the bank’s new business unit dedicated to promoting high-growth companies, brings together these types of products so that your startup can develop with the financial backing and appropriate guidance of specialised bankers.
