Financing without banks is possibleby Admin | September 2, 2021
The beginning of financing without banks
Until not so long ago, the classic sources of financing were the only players in the market when it came to granting a credit or loan operation. It was then that the international economic crisis hit and the scenarios changed radically.
Faced with the uncertainty of the financial ecosystem, banks decided to radically close to credit, causing chaos in many sectors, including the construction sector, perhaps the hardest hit.
A large number of self-employed and small companies were forced to cease their activity, condemned to disappear.
However, in times of economic recession, ingenuity is sharpened and other forms of non-bank financing came to light.
The consolidation of non-bank financing
New financing alternatives began to emerge and to gain prominence among those in need of capital and entrepreneurs.
Something that had already existed since the early days, the concept of "private equity financing", began to gain momentum and today is the preferred source of financing for entrepreneurs and companies in the technology sector.
On the other hand, there are also all the aids and subsidies from the State as an option for financing without banks.
Another figure that has re-emerged in this new era is the equity partner.
Let us analyze each of these sources in detail:
Financing through private equity
As we mentioned before, this has been and is the favorite form of financing for all those entrepreneurial projects closely related to new technologies.
Within private equity financing, there are several options to choose from:
Venture Capital is a type of fund from different private investors, which are usually managed by professionals in the sector through a Venture Capital Company.
Its investment objectives, as its name indicates, are usually projects that imply the assumption of a high risk, but also the forecast of a great potential of profitability.
Venture Capital Companies usually have very diversified investment portfolios.
With our guide to alternative financing you can learn everything you need to know about how to get financing beyond the bank.
In this case we are also talking about private investors, but who individually manage their own capital and make their own investment decisions.
They are usually personally involved in all those projects and initiatives for which they bet, making available to the creators, their experience, knowledge and training.
Incubators and Accelerators
Incubators and Accelerators are entities whose main mission is to serve as a place of incubation and development of several entrepreneurial projects to later promote them as a launching pad to new markets or countries.
They have interesting agendas of contacts, holding events to showcase projects, favorable conditions in different sources of funding and so on.
State aid and subsidies
In times of crisis, many have made use of aid and subsidies from different governments and public administrations, however, and precisely due to the economic recession, this type of aid has also been reduced.
There are certain sectors that have benefited, such as all those related to entrepreneurship, innovation and initiatives with a clear technological base.
An equity partner is a person who finances an important part of a business, assuming a certain risk but trusting in recovering his investment over time.
In general, equity partners keep abreast of the project's activities but do not influence the relevant decision making and do not exercise their activity in the business.
It is essential to agree from the outset on the attributions of each of these partners in order to avoid misunderstandings that could harm the ordinary activity of the business.