Start-up finance

Almost all start-ups require some seed capital. Robust planning is crucial for start-up finance to be successful. You will need to clarify a few questions beforehand: How much money does your project actually need? What financing options are available to you and where will the money come from?

Website content:

Business plan

Financing options

Successful financing

Research funding opportunities



Other funding-related questions you should ask yourself with regard to a start-up: do you use public funding programmes provided by the state of NRW, the Federal Republic of Germany, or the EU as sources of finance? Or capital from private backers such as Business Angels, for instance? The foundation for successful financing is, nonetheless, a good business plan. This is the only way to persuade potential backers to invest in a start-up.

There is plenty to be aware of, therefore, before you can get started on setting up your own company. To simplify your journey to autonomy as a founder, you’ll find the answers to the key questions here.

Business plan

Why do I need a business plan?

In addition to fundamental considerations, such as start-up funding, business idea or consulting, it is first and foremost your businessplanthat discloses important information about the company when founding a start-up. Your business plan is designed to articulate the future business idea and the associated product or service. In addition, it should be clearly structured to demonstrate the key aspects of the new company. This helps tap into sales distribution channels and win over future financial backers.

Structure and key aspects: what belongs in a business plan?

A coherent structure is essential for a business plan. When drafting it, a clear, easy to read structure and a simple, comprehensible writing style are a must. When writing your business plan it’s important to avoid using general statements and unnecessary technical terms. The focus should be on the original and individual nature of the start-up, so that you present the (planned) company at its best. There is no mandatory structure for creating a business plan, but the following provides a tried-and-tested format:

1. Summary

The start of the business plan should always feature a short, general summary. This should include the key aspects of the start-up and answer the most important questions, e.g.: What is the business concept and what is its USP? How will you find new clients? How much revenue and profit can you make in the first few years of business? In this section you should explain, clearly and succinctly, what you actually want to achieve with your newly set-up business.

2. Main body of the text

In this part of the plan you should focus on describing the business idea and how you plan to put it into practice. It should be clear which product or service is being described, and also explain how it will be launched on the market and what it will cost.

1) Business idea

The description of the business idea is a key part of the business plan that discloses crucial details about the company. This is where you should give details of the product or service. The primary focus should be on highlighting exactly why the business idea is good and how you want to put it into practice. It is also essential to state which of the founders’ core skills play a key role and are important for the company’s success.

2) Market and competition

In this part of the business plan the main focus is on the target audience. Specifically, it is a question of defining the target audience and describing how the product or service will be differentiated from the competition.

In addition, this section should also clarify

  • which distribution channels and markets the company is planning to use and
  • how it intends to attract and retain customers long-term.
3) Team and partners

While in the previous section the emphasis was on potential customers, in this section founders should introduce themselves. Here, it is important to highlight the founders’ previous experience, tasks and strengths – but also their industry knowledge. It should be clear who is responsible for which tasks in the company, which skills can be deployed where, and what previous experience in the company there is. Building on this, it can also be advantageous to set out corporate values. These provide a reference framework for the company and reveal more about the values, ideals or culture within the business.

4) Company

In this part of the business plan the primary focus is on describing how the company will be structured. Initially, this can be a description of the company's production processes and core activities. In addition, this part should also show which location and legal form you have chosen for the company – and why.

Alongside information about the company and describing the potential and opportunities, you should also set out the possible risks and associated solutions. This is especially helpful as it allows you to establish a point at which to pull the release cord. By doing this, the financial risk for the company (and for potential financial backers) remains manageable.

3. Finance

Along with the main section, the finance section is particularly relevant, since this mainly deals with valuating the costs and attracting potential investors. First and foremost, investors want to know whether it will be worth their while investing in the new company.

In the finance section, the following points are crucial and should be carefully considered when drawing up your business plan:

  • Private costs: How high is the founder’s cost of living, including pension provision and income tax? These costs need to be recorded as ongoing costs along with the sales revenues.
  • Capital requirements and finance: This should include all costs and expenses that you will incur by starting the company and running it for the first few months. Including advanced equity and the remaining amount in the form of borrowed capital (e.g. through subsidy programmes) that is still needed for the remaining finance.
  • Profitability: Here, you need to describe the company’s profitability in terms of its key performance indicators. This lets you provide details of when the company will be able to start operating at a profit.
  • Liquidity: The issue of which month will see the company's income exceed its outgoings is particularly relevant for banks and investors. This is because, until that point, you will need to finance the drain on your income that starting a business entails.

So, as you can see, the financial part of a business plan should be well thought through and have a clear structure. Because of this, experts sometimes regard the finance section as the heart of the business plan, which banks and lenders in particular will look at.

4. Appendix

The appendix at the end of the business plan comprises all of the important documentsthat are there to support the content recorded in the business plan. This generally includes the following:

  • The founders’ CVs,
  • certificates and credentials
  • licences,
  • patents and
  • other statements or illustrations that serve as important evidence for the founders.


The business plan is a comprehensive and carefully structured representation of a business idea and serves as the ‘route map’ for setting up a successful business. As a rule, you should write it yourself, because doing so provides you with important insights. The business plan should fulfil various quality criteria in order to present the business you are founding at its best right from the start. In addition to visual criteria such as clarity, visualisation and readability, industry-specific and financial explanatory notes are also relevant. These should provide information about how you intend to set up and finance the company.

North Rhine-Westphalia has over 70 Startercenter NRW offering free, independent advice on setting up and promoting a business. Why not make an appointment and discuss your business plan with a consultant in person? At the centres you can find free support with drafting a business plan that can also be used for meetings with banks.

You can find further details about the individual points in the business plan, as well as templates, on the following websites:


Financing options

There are many different ways to found a successful start-up and access the seed capital required. Here, we show the various financing options available when choosing the right means of setting up a company.


Even good business ideas sometimes need a financial boost to start them off. One option offered by NRW.BANK is reduced-interest loans for founders, as well as business continuation in North Rhine-Westphalia. Looking beyond NRW, there are also public loans available from the federal government and the EU for start-ups, for example KfW loans.


Grants can be especially valuable, especially when starting a business. They are an attractive option since they do not normally need to be paid back. Which grants are available?

Consultancy bodies for founders in NRW will be happy to help if you have questions about grants.

Venture capital: business angels and venture capital

In addition to public funding programmes, private investments in the form of venture capital can also form part of the funding mix. Investors known as business angels invest venture capital in promising young companies. This generally has an additional benefit over and above purely the finance aspect: access to the investor’s network and their industry-specific knowledge.

The Business Angel Netzwerk Deutschland [German business angel network] is an example of this: founders have access to experts for both new forms of financing and traditional venture capital funds. However, the state of NRW is very active when it comes to venture capital, for example through its NRW.Venture service, which supports young, fast-growing companies. Or the win Business Angels initiative from NRW.BANK, which brings together innovative companies and business angels.


When it comes to start-up finance, another piece of the puzzle can be regional loan guarantees or guarantees, which are issued by the North Rhine-Westphalia Bürgschaftsbank (guarantee bank). The bank offers freelancers and small and medium-sized enterprises (SMEs) deficiency guarantees of up to 80 per cent, to a maximum of 1.25 million euro. Above this amount, the state of North Rhine-Westphalia guarantees directly with state guarantees, which likewise cover up to 80 per cent of the default risk. You can submit the applications via your principal bank. You can also apply directly for guarantees of up to 200,000 euro at Bürgschaftsbank NRW.


Successful financing

Most founders require seed capital to put their business idea into practice. You can either use borrowed capital or equity capital, or a combination of both types. Careful planning is necessary for successful financing. But it is also crucial to consider other aspects such as taxes, building up reserves and cost reduction.


Reliable planning is vital for successful financing. It helps in evaluating a start-up’s feasibility. One aspect of this is a liquidity forecast: this is where you compare the expected income and expenses. In this way, it is possible to calculate when a company is likely to break even and assess its ability to meet its financial obligations. After all, you will need to budget for ongoing payments, staff costs, insurance, taxes or rent – even when you are just starting out.

Another aspect of planning is determining your capital requirements. Capital requirements planning, as it is known, is essential to any business plan and gives an overview of how much money you will need to invest in the start-up. You will need to determine the following variables: the capital requirements for the formal founding of the business, for the operational start-up phase, for securing your livelihood and for financing the capital requirements.

Once you know how much money you need in total to start your business, it’s time for the finance plan: i.e. clarifying where the funds will come from and what the relationship between equity and borrowed capital will be. A high degree of equity has certain advantages and increases creditworthiness, for instance.

Taxes and reserves

It makes sense to get to grips with taxes before starting a business. You will be dealing continually with the federal tax office while you are self-employed. Tax rights and obligations vary depending on the legal form you have opted for. For example, small business owners do not pay value-added tax to the tax office. As an entrepreneur, you can also claim input tax if you incur expenses for operating resources (e.g. for office equipment or goods) before the company is founded.

The tax office also determines how much income tax you must transfer quarterly. In the first year of self-employment, this figure is based on the information about the expected profit as part of registering for tax. Another type of tax is business tax, which you as a trader have to pay in advance, and there is also corporate income tax, which corporations such as GmbH or UG pay. The subject of taxes and reserves is complex. It is therefore worth visiting a tax consultancy before starting your business.

Differences between the legal forms are not only evident in terms of taxes, but also in accounting. Corporate entities, i.e. UG, AG and GmbH, are required by law to set up reserves and report them on the balance sheet. There are additional separate rules for AG and UG entities that do not concern GmbH. A distinction is also made between open and hidden reserves. We talk of open reserves when these are balanced on a separate reserve account. Hidden reserves, on the other hand, do not appear on the balance sheet. They arise when assets are undervalued, or when debts are overvalued. The balance sheet profit or equity therefore seems lower than it is.

Most importantly: reserves are not the same as provisions. Provisions are open liabilities and are part of borrowed capital. In order to secure their own livelihood, however, it is also advisable for sole proprietors to build up financial reserves. On the one hand, there are financial burdens that can be planned for, such as advance and retrospective tax payments or investments. On the other hand, the business may also experience dry spells with lower sales. Since sole proprietors do not have to keep a balance sheet, however, this type of reserve is simply about setting money aside. Officially, there are no reserves. Nonetheless, it is a sensible approach.

Reducing costs

Setting up a business is associated with various costs that are also included within the business plan through capital requirements planning. These include, for example, the costs of business registration, notary public or entry in the commercial register. It is not possible to reduce costs in every area, but there are some areas where you can save money when setting up a business.

For example, business registration is not always mandatory. It depends on the legal form of the business and on whether you are engaging in freelance or commercial activity. This also applies to entries in the commercial register. You can save on costs at the notary's office, too, by choosing to use a model contract instead of one specifically drawn up for your business. If you are well-prepared for the meeting with the notary it creates less work and requires fewer meetings, which likewise helps to reduce costs.

Current expenses also offer potential for cost reduction: it is not always necessary to have your own office right from the start. Starting off by working from home can be an option, as can hiring co-working spaces, since these offer considerable flexibility. If you need an office, you can save on the costs of furnishings such as office furniture. Last but not least, you can also save on the account management fee. Some banks offer cheap or free terms. While it’s true that each individual cost-cutting measure only saves a small sum, the cumulative effect is definitely worth it. If you look closely, you can almost always find other ways to save money.


Research funding opportunities

As explained above, there is a wide range of financing options: in addition to loan facilities from banks, there are also public subsidy schemes. It’s worth researching the funding opportunities that are out there.

We have compiled various programmes offered by the state of North Rhine-Westphalia, the federal government and the EU so you can stay abreast of all the latest information regarding researching funding opportunities:

Funding in North Rhine-Westphalia

Funding throughout Germany

European Union funding databases

  • The InvestEU programme provides access to finance and available funds, especially for SMEs. The programme provides capital assistance to SMEs that were not reliant on support at the end of 2019 but that have since faced significant risks due to the crisis caused by the Covid-19 pandemic.
  • The EU supports various measures and programmes in the domain of research and innovation, such as Horizon Europe and The Cohesion Fund.

The databases include a host of other funding opportunities. You can use the filter function to search for solutions that meet your specific needs. More information on funding databases.



As you can see, well-planned financing is a vital piece of the puzzle in the whole process of starting a business. It is important to ensure you follow each step, otherwise it makes becoming independent almost impossible. As a rule, no founders have enough capital of their own to cover the financing requirements without help from elsewhere. This is why it is so important to also obtain borrowed capital to secure your plans. External capital can come in the form of venture capital from business angels, bank loans, funding from public subsidy programmes, or a mixture of two or more sources. The same applies to all forms of investment, however: both the business idea and the founders’ skills must convince investors before the company will be granted any loans or funding. And achieving this requires a robust business plan. Your business plan is therefore the linchpin for successfully acquiring finance.

To find out more about starting a business, finance and funding, the Gründen NRW website is a good first port of call. What’s more, every week the website features new, inspiring stories about founders from NRW.

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