Overview
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ABSTRACT
A start-up passes through several stages : R&D, birth, survival, initial success, take off, maturity. R&D and birth are eligible for significant funding. The critical step is the first major capital increase, or seed funding with professional partners. It is necessary to make the right choice of partners, timing, business plan, valorization of the company, clauses of the shareholders agreement. A sound understanding of the identity and activity of the investors is essential in order to achieve capital increase and the future shared management of the company.
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Read the articleAUTHOR
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Gérard CACHIER: École Polytechnique alumnus - Doctor of Science, Consultant - XMP Business Angels. Business Angels of the Grandes Écoles
INTRODUCTION
The term "start-up" emerged with the development of the Internet, to complement the term "young company". It asserts a future growth in activity and results, and can be applied to a wide variety of companies in all sectors, but is more easily attributed to high-tech industries. These are young, innovative companies targeting a new or poorly satisfied need, driven by the expertise and conviction of their founders, and in need of risk-adapted financing. Innovation creates need, helps justify higher prices, and facilitates growth at the expense of conventional players.
Some so-called "technology" companies, wishing to capitalize on a breakthrough achieved in the laboratory to create a disruptive innovation, can secure their first steps by going through support stages before raising funds. Obviously, most young companies, even if they are technical, are not start-ups, and present less risk, but less growth, and are financed like normal companies.
After a long maturation phase, start-ups are now hoped and expected to deliver a little extra sustainable growth, different from the ephemeral growth that many countries thought they could easily buy on credit, with heavy public and/or private debt and turbulence.
Some major successes, contagion and competition with the rest of the world, have contributed to this success and helped create new public and private support since the 2000s, despite the telecoms bubble and subsequent cascading financial bubbles.
As the amount of funding increases, working methods evolve. The number of players is increasing, and the concern for efficiency is becoming more precise: support, loans and financing for start-ups are diversifying, and focusing on specific situations. Founders need to be aware of their existence, how they work and how they complement each other. Options need to be identified well in advance and integrated into their growth plan.
Specifically, this article :
provides a detailed list of public support (financing, practical assistance, taxation) and private support (honor loans, seed investment funds and business angels);
presents the general scheme of fundraising;
lists the main springs;
specifies how the various players operate;
details key documents such as the business plan and shareholders' agreement;
describes the basics of company valuation;
discusses the next steps;
summarizes the strategies to be followed in seeking successive rounds of financing, and the rules...
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The Ultimate Scientific and Technical Reference
KEYWORDS
innovation funding | start-up | Venture capital | subsidies
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Industrial management
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Start-up financing
Bibliography
Websites
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Company start-ups
PACE http://www.apce.com
Chamber of Commerce and Industry https://www.cci.fr/ressources/creation-dentreprise
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Events
Salon des entrepreneurs (in Paris, Lyon, Nantes, etc.) http://www.salondesentrepreneurs.com
Salon des microentreprises (Paris, annual) http://www.salonmicroentreprises.com
Directories
Associations, portals (non-exhaustive list)
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Social networks, associations
Start-up http://www.startupers.fr
Innovative SMEs http://www.comite-richelieu.org
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Data on Business Angels
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In France
According to France Angels (Fédération française des réseaux de Business Angels), 4,000 Business Angels have invested e44.5 million in 327 companies, of which 20% via Société d'investissement de Business Angels (SIBA), with a total of e7,000 in BAs. Overall, co-investments account for 25% of the transactions carried out and amounts invested by Business...
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The Ultimate Scientific and Technical Reference