Funding of your own business

Funding your own business

On Waffle Wednesday 20.3.2019 Olga Nyström was here to talk about funding your own business. Olga has over 12 years of experience in finance, 8 years experience in consulting and Master Degree in Economics from Hanken. According to her, no good and profitable idea should die due to lack of funding.

First Olga talked about 8 basic funding sources that most of us are familiar with:
  • Fund yourself
  • Family, friends and fools
  • Business angels
  • Crowdfunding campaigne
  • Startup incubator group
  • Small business grants
  • Line of credit or loan
  • Venture Capitalists

Olga talked about the importance of optimizing working capital of the company. She said that there is a growing number of programs that support entrepreneurship. Small Business Grant is a good way to start a business. The degree to which these grants ask for social or commercial returns varies. Usually these funding vehicles take a geographic or thematic approach. One has to do some research to find the financing program that best fits the DNA of their business.

According to Olga it is worth using incubators and accelerators. Incubators are often based in major capitals. Some are government funded, others are tied to a University or receive grant funding, while many have a more independent status. They often offer intense programs combined with physical working space, some starting capital, and mentorship.

Here are some of the incubators mentioned:
The most common way of financing companies is getting a bank loan

The average loan is taken for 0,5-6 years and the interest rate is about 2-5%. It is possible to get a Finnvera guarantee for the loan. Finnvera loan is another most commonly used source of funding for young companies. The size of the loan for newly launched companies is 30.000-50.000 EUR with 30000 EUR minimum loan. The loan is given for 3-5 years.


Finnish government provides a grant for starting entrepreneurs of about € 700 / month for one or two six months cycles. The grants are meant for the companies that are based in Finland and working mainly from Finland.

Ministry of Economic Affairs and Employment awards a company development grant. Applications for company development support can be submitted continuously. You must apply for a development grant before starting the project. The grant will be paid on a separate application according to the progress of the project. Payments are retrieved 1-2 times, taking into account the size and duration of the project.

The most promoted and popular among startups are Business Finland grants. Business Finland grants include Innovation voucher of 5000 EUR, Explorer voucher of 10000 EUR, Tempo funding, R&D funding and Funding of Young Innovative Companies. Innovation voucher is 100% grant, Explorer voucher is only 50% grant. Tempo funding is 50.000 EUR and is 75% grant. The startup is required to have 30000 EUR own funds before applying for Tempo funding.

A business angel is also one option for getting financing

Good choice for the company is to turn to business angel, but this money is harder to get. Remember to keep to yourself at least 50% of equity. Average business angel accesses 300 companies and makes only one investment. FIBAN = Finnish Business Angels Network is very active organization. It is the largest in Europe with 650 business angels and 202 millions invested in 1000+ startups during 2010-2017.

When a startup used the Business Finland grants and business angels investments, it can turn to Venture Capitalists. VCs make bigger investments than business angels. Four billion EUR were invested into Finnish companies in the past five years by Venture Capitalists & Private Equity firms.

3-7 years is usually the minimum timeframe of cooperation between an investor and entrepreneur.

So is your business worth of funding? If the answer is positive, use the information above and start working on your financing!

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