When we think of startups, what comes to mind are brilliant ideas, sleepless nights, and the drive to create something innovative. Mr. Schindler, does financing tend to be neglected in this picture?
Of course, commitment and innovation are key factors for the success of a startup—or any business, really. But if you look at why some ventures ultimately don’t succeed, the issue of money comes up pretty quickly. Many founders aren’t primarily motivated by money. That makes it all the more important to avoid taking on unnecessary financial risks.
So you're saying you need to budget for your idea's development from the start?
Exactly. And not just for that. Having the right amount of capital is absolutely crucial: You need funds as a liquidity buffer, for investments, or to drive growth. This capital often isn’t readily available in the form of savings, so it needs to be acquired. Each stage of a startup’s development has its own financing requirements and suitable types of investors. As I mentioned, in the early stages, funding often comes from personal savings, family, friends, or public funding programs. Later on, business angels, banks, or venture capital investors come into play. What’s also important to remember: Every investor brings their own expectations and conditions. Young entrepreneurs should always consider financing decisions in the context of their upcoming development steps—not based too early on the return expectations of a particular investor.
Let’s take a closer look at these different phases, starting at the very beginning.
That would be the so-called “seed phase”: Before entering the market, it’s all about market analysis, business plans, and product development. Revenue is still uncertain, but capital is already needed. At this stage, personal funds, family, friends, and government grants are often the main sources of financing. Business angels may already get involved—but more with their experience than with large sums of money. Even at this early stage, house banks can play a role by providing payment processing, advice on subsidies, and access to networks. Their startup advisory services, business plan reviews, or contacts to guarantee banks can also be extremely valuable. In general, founders are well advised to focus on a few long-term investors and to start building initial securities. If they do this from the beginning, a smart financing structure can make future funding rounds much easier.
The next phase is market entry…
Yes—market entry and validation. The idea becomes market-ready, first customers start paying, and the business model begins to take shape. The company becomes more professional, building structures and clearly defined responsibilities. This often means hiring staff to meet growing demands. Financing increasingly comes from business angels or from accelerator programs like UnternehmerTUM at the Technical University of Munich. Some startups may even attract their first venture capital investors. A liquidity plan becomes essential, and reaching break-even should at least be on the horizon. Investors want to see key performance indicators—and they can also support with sales or organizational development. This phase reveals how realistic the original business plan truly is. It’s a litmus test: Those who have done their homework and can present a convincing case will gain investor trust. At this stage, banks become more viable financing partners. They expect a solid business model and a growing customer base, as they aim to provide access to traditional financing instruments in the medium term.
After the seed phase and market entry comes the growth phase. What should startups keep in mind when it comes to financing?
To grow, a company must be able to scale. This means standardizing processes and increasing productivity. Investments focus on efficiency, market penetration, and sustainable profitability. This is typically when venture capital, strategic investors, or private equity firms come into play—along with banks, for example through development loans or lines of credit. What’s often overlooked are leasing and factoring solutions, which can also be very effective at this stage. Again, it’s wise to keep the investor group manageable. At this point, they’re especially focused on professional financial planning, securities, and a broad customer base. Beyond money, scaling also requires strong organization: Company leadership and structures must grow in parallel. During the growth phase, consolidation becomes relevant too—through strategic partnerships, international expansion, or acquisitions. Financing can turn into a strategic lever. By this point, a company is already quite far along in its journey.
What key piece of advice would you give startups when it comes to financing?
I would definitely advise them not to view financing as a one-off task, but as an ongoing strategic responsibility. Especially in an economic environment with some uncertainties, a solid financing strategy is a real competitive advantage—throughout every stage of a company’s development.
