Where should a start-up entrepreneur look for funding? - Tips and options

Starting a business often requires more capital than many people initially think. Even if the business idea is strong and the plan is clear, money is still needed for things like equipment, marketing, working capital and possible initial purchases. Fortunately, there are many financing options available to the budding entrepreneur - as long as you know where to start.

In this guide we go through in concrete terms, where start-up entrepreneurs can apply for funding, what the different options mean in practice and how to ensure that the application process is as smooth as possible.

1. Start-up money - support for the early stages of entrepreneurship

Start-up money is one of the most common ways to finance a new entrepreneur. It is a discretionary grant provided by the TE services to help secure an income in the early stages of a business.

• As a rule, the aid is paid for 6 months
• In certain cases, you can receive support for up to 12 months
• Start-up money is not investment aid, but is intended for the entrepreneur's personal livelihood

Start-up money is good a financing option for a start-up entrepreneur, once the business plan and profitability calculations are in place.

2. A bank loan - a traditional but secure solution

Bank loans are still an important part of start-up financing for businesses. Banks usually require collateral, so a guarantee from Finnvera, for example, is important for many start-ups.

A bank loan is particularly suitable:

• for investment
• for equipment purchases
• to cover working capital

You are more likely to get bank financing if you present a clear budget, a realistic cash flow forecast and a credible business plan.

3. Finnvera guarantees and loans

Finnvera is a special state-owned financial institution that supports start-up and growth companies. Finnvera's role becomes more important when an entrepreneur does not have sufficient collateral for a bank loan.

Options suitable for the start-up entrepreneur:

• Start-up guarantee - facilitate access to bank loans
• Small loans - even for small investments and working capital
• Entrepreneurial loan - to a person who owns a majority stake in the company

Finnvera is for many company financing the first real partner alongside the bank.

4. Business Finland - for innovative and growing businesses

If your company is developing a new product, service or innovation, Business Finland could be the right funding partner for you. Their funding focuses on growth, internationalisation and product development.

Popular forms of financing:

• Innovation voucher
• Tempo funding
• Research and development loans

Business Finland is particularly suitable for companies that invest in product development and want to target growth markets.

5. Investors and venture capital - an option for a growth-oriented company

If your company is aiming for rapid growth, business angels, investors and venture capitalists can be the solution. In addition to finance, they often bring expertise, networks and sparring.

The investments are suitable for companies that:

• are willing to give up a small share of ownership
• aim for rapid growth
• operate in a scalable market

Investor finance is not usually the first option for traditional sole traders, but it is an excellent opportunity for growth companies.

6. Business support and regional funding opportunities

Many municipalities and regional actors offer grants and subsidies to promote local entrepreneurship. For example ELY Centres can cover development projects or investments.

You can also find:

• regional development funding
• funding opportunities for business accelerators
• local business funds

Getting these usually requires more detailed planning and clear objectives.

7. Crowdfunding - a modern alternative

Crowdfunding offers the opportunity to raise funds from a wide range of people. It works best when your product or service attracts interest from a wide audience.

The most common forms:

• remunerated crowdfunding
• crowdfunding in the form of loans
• equity crowdfunding

This option emphasises good marketing and a clear story.

Summary

A start-up entrepreneur doesn't have to finance everything on their own. Finland offers diverse and easily accessible financing options for start-ups, such as start-up money, bank loans, guarantees from Finnvera and even investors. With a clear business plan, budget and cash-flow projections, it is much easier to apply for funding.

If you need help with budgeting, calculations or choosing the right financing channel, Konkretia Kirjanpito will be happy to help.