{"id":17142,"date":"2024-11-06T16:48:07","date_gmt":"2024-11-06T16:48:07","guid":{"rendered":"https:\/\/letslaw.es\/?p=17142"},"modified":"2024-11-06T16:48:07","modified_gmt":"2024-11-06T16:48:07","slug":"startup-funding","status":"publish","type":"post","link":"https:\/\/letslaw.es\/en\/startup-funding\/","title":{"rendered":"Startup funding: investment rounds vs. bank financing"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The fact that a <\/span><a title=\"capital increase in a startup\" href=\"https:\/\/letslaw.es\/en\/capital-increase-in-a-startup\/\"><span style=\"font-weight: 400;\">startup needs capital<\/span><\/a><span style=\"font-weight: 400;\"> to grow is no mystery. By their very nature, these companies require funds to develop their business plans.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before analyzing the advantages and disadvantages of the various options, there are two points I would like to highlight:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">First, <\/span><b>these are not the only sources of funding available to a startup<\/b><span style=\"font-weight: 400;\">. In fact, public financing can be key to a company\u2019s growth. From programs like ENISA or NEOTEC to grants, subsidies, and loans on favorable terms, founders should evaluate all available options, not only at the national level but also regionally and through specific programs aimed at certain sectors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Secondly, it\u2019s important to note that <\/span><b>there is no magic formula: each startup must carefully analyze the financing option that best suits its needs<\/b><span style=\"font-weight: 400;\">. Some companies, due to their sector or business model, can grow organically through bootstrapping, while others require significant capital injections that can only be obtained through investors who believe in their project.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Now, moving on to the details, we can consider two levels of analysis: the economic and the strategic\/mercantile.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The economic analysis is based on the<\/span><b> terms of the capital obtained<\/b><span style=\"font-weight: 400;\"> (repayment period, interest, etc.). From this perspective, it is relatively easy for founders to assess which option is more attractive to them, as the criteria are purely objective.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The strategic\/mercantile analysis is much more complex and depends on the specific situation of each startup. There will be cases where, due to their recent establishment, the startup has difficulty accessing bank financing without offering personal guarantees (which should be avoided if possible). It may also happen that an investor, in a pre-seed phase, <\/span><b>not only provides capital but also valuable experience and connections<\/b><span style=\"font-weight: 400;\">, which can be especially helpful for novice founding teams. Additionally, it could involve an industrial partner who provides resources, such as manufacturing capabilities for future development.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, this investment generally involves the investor entering the share capital, accompanied by specific conditions established in a <\/span><a title=\"shareholder agreement\" href=\"https:\/\/letslaw.es\/en\/commercial-lawyers\/shareholders-agreements\/\"><span style=\"font-weight: 400;\">shareholder agreement<\/span><\/a><span style=\"font-weight: 400;\">. This document will include clauses that regulate the relationship with the investor and, after negotiations, may <\/span><b>incorporate rights that protect the investor&#8217;s interests<\/b><span style=\"font-weight: 400;\">, such as a <\/span><a title=\"preferred exit right\" href=\"https:\/\/letslaw.es\/en\/the-investor-exit-clauses\/\"><span style=\"font-weight: 400;\">preferred exit right<\/span><\/a><span style=\"font-weight: 400;\"> or preferences in dividend distribution or in the event of liquidation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This aspect is not necessarily negative; the important thing is that the rules of the game are clear. Sometimes, resorting to an investment round allows founders to raise a significant amount at an appropriate pre-money valuation, which propels the company toward new goals. Furthermore, bringing in well-known partners in the sector can provide valuable support for growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, we recommend that startups conduct a careful evaluation of the funding they will need not only in the short term but also in the medium term, in line with their business plan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They should also <\/span><b>carefully assess the available funding sources and design a strategy <\/b><span style=\"font-weight: 400;\">that combines the options that best fit the company\u2019s needs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If opting for an investment round, it will be crucial to prepare a solid investment deck and have a shareholder agreement that allows for negotiating the terms of the investment. It\u2019s important to clarify all the terms in a convertible note or in the investment <\/span><a title=\"term sheet\" href=\"https:\/\/letslaw.es\/en\/term-sheet\/\"><span style=\"font-weight: 400;\">term sheet<\/span><\/a><span style=\"font-weight: 400;\">. In this blog, we have extensively covered these topics and recommend reviewing them if you are interested in delving deeper.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this way, the founding team will be better prepared to successfully tackle the challenge of financing the company.<\/span><\/p>\n<div class=\"cyp_post_formulario\"><h2>Contact Us<\/h2>\n<div class=\"wpcf7 no-js\" id=\"wpcf7-f3074-o1\" lang=\"es-ES\" dir=\"ltr\" data-wpcf7-id=\"3074\">\n<div class=\"screen-reader-response\"><p role=\"status\" aria-live=\"polite\" aria-atomic=\"true\"><\/p> <ul><\/ul><\/div>\n<form action=\"\/en\/wp-json\/wp\/v2\/posts\/17142#wpcf7-f3074-o1\" method=\"post\" class=\"wpcf7-form init wpcf7-acceptance-as-validation\" aria-label=\"Formulario de contacto\" novalidate=\"novalidate\" data-status=\"init\">\n<fieldset class=\"hidden-fields-container\"><input type=\"hidden\" name=\"_wpcf7\" value=\"3074\" \/><input type=\"hidden\" name=\"_wpcf7_version\" value=\"6.1.5\" \/><input type=\"hidden\" name=\"_wpcf7_locale\" value=\"es_ES\" \/><input type=\"hidden\" name=\"_wpcf7_unit_tag\" value=\"wpcf7-f3074-o1\" \/><input type=\"hidden\" name=\"_wpcf7_container_post\" value=\"0\" \/><input type=\"hidden\" name=\"_wpcf7_posted_data_hash\" value=\"\" \/><input type=\"hidden\" name=\"_wpcf7_recaptcha_response\" value=\"\" \/>\n<\/fieldset>\n<div class=\"campo_nombre\" style=\"width:100%\"> <span class=\"wpcf7-form-control-wrap\" data-name=\"your-name\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-text wpcf7-validates-as-required datos-contacto2\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Name\" value=\"\" type=\"text\" name=\"your-name\" \/><\/span><\/div>\n<div class=\"campo_telefono\" style=\"width:100%\"> <span class=\"wpcf7-form-control-wrap\" data-name=\"your-phone\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-tel wpcf7-validates-as-required wpcf7-text wpcf7-validates-as-tel datos-contacto2\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Phone\" value=\"\" type=\"tel\" name=\"your-phone\" \/><\/span><\/div>\n<div class=\"campo_email\" style=\"width:100%\"> <span class=\"wpcf7-form-control-wrap\" data-name=\"your-email\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-email wpcf7-validates-as-required wpcf7-text wpcf7-validates-as-email datos-contacto2\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Email\" value=\"\" type=\"email\" name=\"your-email\" \/><\/span><\/div>\n<div class=\"campo_asunto\" style=\"width:100%\"> <span class=\"wpcf7-form-control-wrap\" data-name=\"your-asunto\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-text wpcf7-validates-as-required datos-contacto2\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Subject\" value=\"\" type=\"text\" name=\"your-asunto\" \/><\/span><\/div>\n<div class=\"campo_mensaje\" style=\"width:100%\"> <span class=\"wpcf7-form-control-wrap\" data-name=\"your-mensaje\"><textarea cols=\"40\" rows=\"10\" maxlength=\"2000\" class=\"wpcf7-form-control wpcf7-textarea wpcf7-validates-as-required datos-contacto2\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Message\" name=\"your-mensaje\"><\/textarea><\/span><\/div>\n<input class=\"wpcf7-form-control wpcf7-hidden\" value=\"\" type=\"hidden\" name=\"cyp_form_url\" \/>\n<input class=\"wpcf7-form-control wpcf7-hidden\" value=\"cyp_zonaweb\" type=\"hidden\" name=\"zonaweb\" \/>\n<span class=\"wpcf7-form-control-wrap recaptcha\" data-name=\"recaptcha\"><span data-sitekey=\"6LfbCuUpAAAAAGu5f0__hms_y9Kscc_NCNdDGnEJ\" class=\"wpcf7-form-control wpcf7-recaptcha g-recaptcha\"><\/span>\r\n<noscript>\r\n\t<div class=\"grecaptcha-noscript\">\r\n\t\t<iframe loading=\"lazy\" src=\"https:\/\/www.google.com\/recaptcha\/api\/fallback?k=6LfbCuUpAAAAAGu5f0__hms_y9Kscc_NCNdDGnEJ\" frameborder=\"0\" scrolling=\"no\" width=\"310\" height=\"430\">\r\n\t\t<\/iframe>\r\n\t\t<textarea name=\"g-recaptcha-response\" rows=\"3\" cols=\"40\" placeholder=\"Aqu\u00ed la respuesta de reCAPTCHA\">\r\n\t\t<\/textarea>\r\n\t<\/div>\r\n<\/noscript>\r\n<\/span>\n<div style=\"width:100%\">\n<p class=\"form-input-check\" style=\"color:#444444 !important;padding:0px !important;margin:0px !important;font-size:12px !important;margin-bottom:15px !important\">\nBy clicking on \"Send\" you accept our <a href=\"https:\/\/letslaw.es\/en\/privacy-policy\/\" target=\"_blank\">Privacy Policy<\/a> - 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By their very nature, these companies require funds to develop their business plans.<\/p>\n","protected":false},"author":54,"featured_media":17141,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[260],"tags":[],"class_list":["post-17142","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-law"],"_links":{"self":[{"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/posts\/17142","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/users\/54"}],"replies":[{"embeddable":true,"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/comments?post=17142"}],"version-history":[{"count":4,"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/posts\/17142\/revisions"}],"predecessor-version":[{"id":17143,"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/posts\/17142\/revisions\/17143"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/media\/17141"}],"wp:attachment":[{"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/media?parent=17142"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/categories?post=17142"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/letslaw.es\/en\/wp-json\/wp\/v2\/tags?post=17142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}