• Kurt Schmidt

Funding Startups

Today, it's not hard to stumble across success stories of companies raising capital in alternative ways. By alternative, we mean not using banks or traditional lenders or even business angels. Since the financial crisis of 2007, anyone starting a business has realized raising capital is one of the hardest tasks and a critical area of the business plan.

This demand for alternative funding mechanisms has given a rise to a growing industry already estimated to be worth billions of dollars. According to recent research published by The Economist, in 2014 global investment in fintech reached $12 billion, up from $4 billion a year earlier. In addition, Goldman Sachs estimates that global revenues linked to the growth of fintech could be as high as $4.7 trillion.

Taking a step back, it's important to realize that funding is just one (important) piece of the puzzle. In addition to securing capital, there is a myriad of resources, services and environmental factors that are critical to startup development.

Timely access to professional services (such as legal, tax, accounting and developers / programmers) plays a positive role for startups to succeed. As a result, today we are witnessing the growth of ecosystems designed to support startups and small enterprises in many cities around the world. In dedicated areas or business hubs, incubators, accelerators and shared office spaces, knowledge sharing and mentor services form networks that support thriving business activity. These groups of experts assist startups and ensure they have access to timely knowledge and information they need, beyond capital requirements.  

In addition, many governments around the world have rolled out new regulations covering equity crowdfunding or P2P lending and online digital investments. Governments are taking active steps to keep up with innovations in finance by providing frameworks and an environment in which operators and participants can transact safely and efficiently.

As startup ecosystems grow, so do the associated services that support them. At this highest level of small enterprise planning, neural networks or sophisticated platforms that monitor and manage them connect all stakeholders in real time and with access to critical business data. By using these networks, it is possible to better plan, measure and drive the growth of startups, identify bottlenecks and better allocate resources to them.

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