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Module 5 - Funding & investment

2. Types of funding

The type of funding strategy you decide to employ will depend on the type of business you want to build. Some business ideas need little funding to get started whilst others require much more capital. An agriculture business such as an aquaponic farm will have heavy initial capital expenditure (cost of machinery, cost of physical location, scientific expertise etc) whereas a business making a food product can start on a small scale with little upfront investment, grow organically & only require more capital to scale. What type of funding you take on also depends on how much control you want to keep over your business and on your risk appetite. If you take on equity investment, you’ll be giving a share of your business to investors whereas if you take on debt, you’ll keep control but will be responsible for repaying it. Let’s look at the different options in more detail.

Grant funding

If you can get grant funding, do it! The plus side? It’s free money. Money you don’t have to pay back and money you don’t have to give equity away for. It’s usually given out by governments, foundations, NGOs or large businesses. The downsides? Grant applications can be lengthy, complicated, take a long time to be processed and have relatively strict criteria to fit into, often tying you to delivering charitable objectives, not perfecting your business. To find sources of grand funding: look for charitable foundations in your country; attend philanthropy and startup events; see if other sustainable ventures or social enterprises have received funding that may apply to you; set up Google alerts with key words and search whether there are aggregate sites of grant funders in your country. Here are a few pan-European or global ones to get you started (we haven’t included country specific ones):

“Have you used or heard of an alternate funding stream?”