Financing Innovation: USA and Spain overview

The way startups get financed is in constant evolution. In a recent Business Insider article you can find an analysis that describes what is happening in the USA:

  • Crowdfunding: two interesting examples are  Kickstarter and Lending Club. The first is a funding platform for creative projects, where in exchange of funding you receive rewards, the second is an online financial community bringing together investors and creditworthy borrowers. Another platform that makes it easier for startups to get accredited investors attention and get funding is AngelList.  The service is not technically crowdfunding, but facilitates early funding search
  • Accelerators: they offer equity, access to resources, and support to find the next financing round investors. Some of the most known are: Y Combinator, and TechStars
  • Angels: entrepreneurs with equity to invest in new promising startups. A list of angels, and amount invested per year, is analyzed at buzzsparks.org
  • Late-Stage private equity: VCs or investment banks focused on providing large rounds and capable to prepare the company for the next move to the IPO. In this group we have: Sequoia, KPCB, Accel, etc.. their activity during the last years can be monitored at this link. In this group we mention the service provided by new platforms like Second market (2011 transactions: $558MM) where private companies stocks can be sold to accredited investors
  • IPO: this is the last stage of the financing journey, but due to the volatility of today markets, regulations and cost, is not always the best option even for successful companies

Some of the financing options in Spain are described in the following list:

To have an overview of a real financing case, we can analyze the experience of Privalia. The story of Privalia is described in detail in a post from Carlos Blanco blog, and can be resumed in the following steps:

  • 0.4MM€ in January 2007 (La Caixa, Europa Press, Luis Martín Cabiedes)
  • 2.5MM€ in November 2007 (La Caixa, Europa Press, Luis Martín Cabiedes)
  • 4MM€ in July 2008 (Nauta Capital, Europa Press, Luis Martín Cabiedes). In this round La Caixa made some cash out, and Europa Press, Luis Martín Cabiedes invested more than 1MM€
  • 8MM€ in July 2009 (Highland Capital Partners, Insight Venture Partners and Nauta Capital). With the consequent cash out from Luis Cabiedes and Europa Press
  • 70MM€ in October 2010 (General Atlantic and Index Ventures)
  • 88MM€ in March 2011 (General Atlantic, Highland Capital Partners, Index Ventures, Insight Venture Partners)

In today’s markets rising money is not easy, but the process can be even harder if you are not prepared. For this reason a good strategy is fundamental to reach the right target investor and to sell your idea. A useful guide can be found in this great post from Mark Suster (GP at GRP Partners). As you know, luck happens when preparation meets opportunity…Enjoy the journey!

Which are the companies you would like to contact to implement your fund rising strategy?

Photo Credit: Mark Coggins via Flickr
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