Fundraising

To turn research results into reality and apply them through spin-offs

A word to the wise: Seek advice every step of the way!

To obtain funding from sources other than credit providers, a company can resort to fundraising. This involves bringing investors into a company’s capital. These investors contribute money to the company in return for a stake in its share capital.

The most important aspect of raising funds is the assessment of the company’s financial worth.

The founder, who has been involved in the project for months or even years, often fears being undermined if they open up their capital and give too large a stake to investors.

An all-too-common mistake: overestimating the financial value of your project to avoid dilution*.

>> A financial assessment that is too high risks driving away potential investors and hinderingsubsequent fundraising.

When fundraising, it is essential that the company receives
sufficient funds to meet its needs, even if this means
agreeing to sell a percentage of the capital.

* Dilution occurs in all capital increases, and therefore in most fund-raising operations. This phenomenon involves the company issuing new shares to new shareholders, which means – for the founders of the company – a reduction in their percentage holding of the share capital.

If things go well, the company will need to raise additional funds to ensure its growth.
The funding market can be structured as follows:

The more accurate the initial financial assessment, the easier the subsequent negotiations will be.
Get help from an external expert!

Fundraising is about striking the right balance between:

>> Capital and other sources of non-dilutive funding (loans of all types);
>> Public and private investors.

There is a strong temptation to favour non-dilutive sources of finance, but putting the company into too much debt at the start risks compromising the entire project.
It is therefore important to validate the business model and draw up a financial plan based on realistic scenarios, in order to assess the company’s needs as accurately as possible and adapt the funding arrangements accordingly.

Once again, this is a job in itself . Seek advice!