MAIN TOPICS: - Why do startups need money? - What are the sources of finance? - What are their pros and cons? - How to choose? - Overview of the financing sources - One word on Entrepreneurial Ecosystems --- This session is part of a 10-weeks course given to master students of the SOLVAY BRUSSELS SCHOOL OF ECONOMICS AND MANAGEMENT by professor Olivier WITMEUR.

1. www.solvayentrepreneurs.be
HOW TO FINANCE MY VENTURE?
SESSION 7 (out of 10)
ENTREPRENEURIAL
FINANCE
This session is part of a 10-weeks course
given to master students of the SOLVAY
BRUSSELS SCHOOL OF ECONOMICS
AND MANAGEMENT by professor Olivier
WITMEUR.

2. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
• Why do startups need money?
• What are the sources of
finance?
• What are their pros and cons?
• How to choose
• Overview of the financing
sources
• One word on Entrepreneurial
Ecosystems
• Guide to VC
2
Desired Outcomes of the Session

3. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
The Entrepreneurial Framework
3
ENTREPRENEUR
OPPORTUNITY
RESOURCES
Conviction
Creativity
Communication
CONTEXT
Adaptation
Fits &
Gaps
* Adapted from J. Timmons & A. Bidé

4. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
OVERVIEW OF THE FINANCING
SOURCES FOR NEW VENTURES
#1
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5. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
• Losses, i.e. Opex > Revenues
• Investments, i.e.:
– Hardware: infrastuctures (Capex)
– Software: IP/R&D, business development (NB: sometimes considered as opex)
• Working capital: Accounts receivables, inventories, Work in progress…
• Seasonal effects
• Security margins i.e. a plan without margins is not a plan
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Typical Financial Requirements / Use of Funds

6. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
Typical Cash Curve
6
The happy days
The promised land
Death Valley Financial needs
In doubt

7. CIMITYM

8. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
1. Self-financing / Bootstrapping
2. Equity
3F: Family, Friends & Fools … or ‘love money’
Crowdfunding
Business Angels (= individuals)
Venture Capital (= professional investors, many types)
Industrial partners
Stock markets
3. Debts (mainly from banks)
Short term
Long term
4. Grants
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Four Main Types of Financings

9. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
Risklevel
Company maturity
FFF / Crowdfunding
BUSINESS ANGELS
VENTURE CAPITAL
STOCK MARKETS
BANKS
Financing the Entrepreneurial Venture
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GRANTS
Low
Low High
High

10. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
Losses à Equity
Investment à Debts, leasing, renting (equity at early stage)
Working capital à Debts and equity
Seasonal effects à Credit lines
R&D à Equity and grants
Security margins à Equity and debts
Growth preparation à Equity or self-financing
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Not all financings have the same objectives.

11. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
Selection Criteria (Entrepreneur’s Perspective)
11
WHO?
Timing+
Difficulty
Deep Pockets
@ t1, t2, t3…
Expertise+ Network
(Smart money)
Cost (all types) /
Expected return
Accepted risk /
Collaterals
Hands On / Off
Additional constrains:
exit, location….

12. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
Rough comparison (many exceptions!)
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3F BA VC Bank Grants
Timing / Difficulty ++ - -- + -
Cost ++ -/-- (Dilution) o ++
Collaterals ++ ? ++ ++ -- ++
Deep pocket -- o ++ ++ +
Involvement in
Management
No ? Yes No No
Constrains Atmos. Exit Low Location
Expertize / Smart
Money
-- +/++ - --

13. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
ONE WORD ON THE
ENTREPRENEURIAL ECOSYSTEM
#2

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Supporting opportunity entrepreneurship
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More new ventures,
more gazelles …
More entrepreneurs
• Role models, success
stories
• Social norms, culture
• Education
• Social system
More opportunities
• Research
• Regulation
• …
More money
• Tax condition
• VC
• Stock market
• Grants
• Banks
• …
More support
• Public leaders
• Incubators /
infrastructures
• Skilled people
• Advisers
• Incentives
• …

15. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR 15

16. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
The Entrepreneurship Action Plan is a blueprint for decisive action to unleash Europe's entrepreneurial
potential, to remove existing obstacles and to revolutionise the culture of entrepreneurship in Europe.
Investments in changing the public perception of entrepreneurs, in entrepreneurship education and to
support groups that are underrepresented among entrepreneurs are indispensable if we want to create
enduring change.
Only if a large number of Europeans recognise an entrepreneurial career as a rewarding and attractive option
will entrepreneurial activity in Europe thrive in the long term.
The Entrepreneurship 2020 Action Plan is built on three main pillars:
1. Entrepreneurial education and training
2. Creation of an environment where entrepreneurs can flourish and grow, and
3. Developing role models and reaching out to specific groups whose entrepreneurial potential is not
being tapped to its fullest extent or who are not reached by traditional outreach for business support.
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Entrepreneurship 2020 Action Plan (2012)

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NEVER STOP
WONDERING
&
ASKING!

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A real passion for entrepreneurship education and entrepreneurs.
• Student entrepreneurs: 2x
• Full time entrepreneur: once, in a team of 5
• Coach: 500+ projects over the last 20 years
• (Advisory) Board member in multiple new ventures
• Policy making: 2x
• Director of Solvay Entrepreneurs
• PhD in entrepreneurship in 2008
• … never as an investor
My wife (as Colombo), no kids, one dog (Vicky).
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Olivier Witmeur (Belgian, 46)

19. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
Solvay entrepreneurs is the entrepreneurship center of the Université Libre de
Bruxelles. We support entrepreneurs through the development of their venture, from
an idea to a successful and sustainable business.
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Solvay Entrepreneurs

20. Entrepreneurship Course – Session 7 - 2014 © Olivier WITMEUR
Let’s keep in touch!
202014%©%Olivier%Witmeur
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