Successful expansion. Securing financing as a startup.
The journey from the initial idea to successful expansion is an exciting one for a startup. It is vital that financing is secured during the various phases, but finding investors can be a challenge.
From the initial idea to a fully ledged startup
A visionary idea, pioneering spirit, and plenty of passion – all essential ingredients for founding a successful startup. But there is also one more ingredient needed to take a company from launch to expansion abroad – secure financing.
"In the very early stages, the key to success as a startup is usually in your own hands," says Andreas Roth, Head of the Credit Suisse TOP 100 Startups collaboration, in a breakout session during Switzerland Global Enterprise's (S-GE) International Trade Forum. "If you have faith your vision, your next step is to convince friends, family, and fools of the merits of your business idea. When it comes to developing a prototype, startup founders also need to bring business angels on board, and that can be a challenge for a young company."
Using factoring and leasing as financing
If a prototype is ultimately to be developed into a market-ready product with potential for mass production, significant additional capital will be needed. It can be beneficial to attract professional backers such as institutional investors, venture capital funds, startup funding programs, or established entrepreneurs to act as partners for collaboration and financing. As revenue and cash flow increase, startups that are rapidly growing and expanding may also find debt financing methods such as factoring or leasing an interesting opportunity.
Find investors for successful financing
At the start of the financing phase, many startups find themselves asking: How do you actually find investors who will provide capital? "Firstly, it can be useful to turn to your personal network. And secondly, it is worth talking to people who have already founded a business and secured financing, in order to benefit from their network and their experience," says Stefan Steiner, Managing Director of Venturelab AG.
Stefan Steiner also believes that dedicated events offer a fantastic opportunity for startups to find suitable backers. "Each year we invite 100 investors from Switzerland and abroad to attend the Investor Summit, where we showcase Swiss startups. Other events such as the TOP 100 Startup Award and the Credit Suisse Investor Circle can also be helpful when it comes to finding people who want to invest," adds Steiner.
The financing phases of the startup Ego Movement
The Ego Movement case is a great example of how successful financing and the creation of a network can look. The startup specializes in selling e-bikes and electric cargo bikes. Since it was first founded 2015, it has been through various financing phases in order to push ahead with further expansion.
"We invested a lot of our own equity capital into the startup initially. Once we were able to demonstrate that our business model was working, we were supported by seed investors who believed in our idea," says CEO Daniel Meyer. The company was able to build from a healthy mix of debt capital and equity capital from that point onward.
Driving expansion with financing partners
It is important to the CEO of Ego Movement that any financing partner should truly act as a partner, and not just a backer. "It helps if the financing partner can see the bigger picture and isn't just focused on the hard figures," says Meyer.
Ego Movement has found just the partner it is looking for in Credit Suisse. The bank supported the company in the past with startup growth financing and was also a partner a year ago when Ego Movement received a state-backed guarantee from the Federal Office for the Environment (FOEN) and its technology fund. This guarantee helps innovative Swiss companies to obtain loans and use them to develop low-carbon technologies.
Daniel Meyer adds: "With our series A financing, growth financing from Credit Suisse, and the loan provided by the technology fund, we had a total of CHF 3.0 million of growth capital at our disposal." This will now be used for further expansion and to scale up the business model. This means that we are likely to open a few more stores in the future in addition to the eight we already have in Switzerland and further three in Germany.