Startup 2015: Main sources of finance for new business

From crowdfunding, bank loans and venture capital to feasibility funds and innovation vouchers, there seems to be an abundance of options for startups and business owners.

Nonetheless it is vital to know which funding option is best suited to you and your business, and which agency or organisation can best support you. Here is a guide to some funding options for Irish Startups:


This should be the first port of call for startups in Ireland. There are significant state supports for start-up businesses and businesses looking to scale. The first port of call is to your Local Enterprise Office (LEO). The LEO teams are very experienced in supporting start-up businesses and they will be delighted to assist you in exploring the wide range of financial assistance and training supports available to start-up businesses. In engaging with all the state enterprise support agencies, it really helps to have an initial business plan which outlines the market opportunity, the solution you have identified and how you are going to sell this to customers. Don’t worry about how much detail is in the plan, the key is to help people understand the opportunity you see in the market and help you to validate a genuine business opportunity.

Feasibility Study / Innovation Grant:

Source: Local Enterprise Offices (LEOS) and Enterprise Ireland.

What you get: 50% of costs excluding VAT capped at €15,000.

Key details: Feasibility grants are designed to assist the promoter with researching market demand for a product or service and examining its sustainability. It includes assistance with innovation including specific consultancy needs, hiring of expertise from third level colleges private specialists, design and prototype development.


Refundable Priming Grant:

Source: Enterprise Board

What you get: 50% of costs excluding VAT average amount. Employment grants of €10,000 per job are obtainable. Grants up to €80,000 depending on the number of jobs made.

Key details: These are the primary state support for start-up businesses with the potential to create jobs. These grants cover salary costs, capital items, consultancy, innovation, marketing and overheads.


Innovation Voucher:

Source: Enterprise Ireland

What you get: The max you can apply for is €5,000 and it has to be used with a 3rd level institution.

Key details: This is a very helpful mechanism to tap into the expertise of 3rd level colleges and is particularly helpful in cases where you need some prototyping work done. Entrepreneurs who currently do not have access to technical resources find these vouchers extremely valuable in supporting initial development of a prototype product.


New Frontiers Entrepreneur Development Programme:

Source: Enterprise Ireland full-time incubation programme in partnership with the 14 Institutes of Technology ( IoTs) across the country

What you get: Experienced start-up incubation team providing valuable mentoring and training/support in key areas such as sales and raising investment. There is also a grant of up to €15,000 for those businesses who proceed to phase 2. There are normally 10 – 12 businesses accepted on each programme, there is a competitive application process and places are highly sought after.

Key details: This is an ideal stepping stone for start-ups with significant potential to scale and attract investment..


Competitive Start Fund:

Source: Enterprise Ireland

What you get: €50,000 for a 10% equity stake.

Key details: This is a very competitive process but represents a very strong option for start-up businesses who have significant potential to scale and attract future investment. In many cases, this provides a start-up business with sufficient investment to bring a minimal-viable-product (MVP) to the marketplace and achieve initial sales to customers.



Credit Review Office:

Provides a simple review process for Small and Medium Enterprises who have had requests for credit refused or existing credit facilities reduced or withdrawn.


Credit Guarantee Scheme:

This Government scheme enables the State to act as a guarantor to the bank for your loan application. The purpose of the scheme is to guarantee SMEs that have been declined credit due to inadequate collateral and/or lack of understanding of the business model.

With over €100k on offer through various government grants you should think long and hard before looking for alternative sources of finance and bringing third party investors onboard.

As a startup your priority should be building traction with customers.

However, down the line as the business expands you may need to think about more long term funding options, some of which we discuss later.



Crowdfunding is the financing of a new project by raising many small amounts of money from a large number of people.

Advantages: Access to capital without equity stakes or rigid bureaucracy.

Disadvantages: A lot of projects never get off the ground which can be frustrating given the amount of time you can spend setting up the campaign.

The following are the main crowdfunding platforms in Ireland:


An Irish crowdfunding firm from the same people that developed iDonate, iFundraise and iRegister.

Rate: 4% commission



An Irish-owned not for profit organisation working to support resilience and transformation in the cultural sector through research, innovation and partnership.

Rate: 5% commission


Linked Finance:

Another Irish owned crowdfunding site with favourable commission rates.

Rate: 2.5% commission


You may also want to check out international crowdfunding platforms open to Irish startups:


Having funded over 77,000 creative projects since 2009 Kickstarter are a big globalplayer in crowdfunding.

Rate: 5% commission



Indiegogo are another big player in international crowdfunding.

Rate: 9% but they refund you 5% if your project goes ahead.



Micro Finance loans are a great way for small businesses to access capital that would have no opportunities going through a large financial institution or might struggle going through crowdfunding.

Advantages: Access to capital without stringent criteria.

Disadvantages: Rates of return can be quite high as a result of the borrower generally having a higher risk profile.

Microfinance Ireland:

A not-for-profit lender established to deliver the Government’s Microenterprise Loan Fund.

MFI provides loans from €2,000 up to €25,000 to newly established start ups or to growing micro-enterprises that do not meet up to the conventional risk criteria which can be applied by commercial banks.


Microfinance LEO Loans:

What you get: Loans from €2,000 up to €25,000 from three to five years.


According to a 2012 National Federation of Independent Business (NFIB) study 79% of small business owners used credit cards to start or grow their business. That says a lot about the significance of using credit cards to capitalise a small business.

Microloans are small loans typically issued to borrowers who are low income earners or have less than perfect credit and do not qualify for traditional bank financing.


This is the No.1 small business financing option for most people who find that they don’t qualify for credit cards, microloans, or any other type of “traditional bank financing.”

This is a great way to get started. If you don’t qualify for things like business credit cards or traditional bank financing, then you may want to take the appropriate steps to correct any credit issues that may be part of the problem.

We would all like to have more financing options in the future as we grow our businesses. If you’re like millions of other business owners with less-than-perfect credit, then do something about it.

The 3 F’s: Family, Friends and Fools:

This is a great example of how the small business financing options are different for everyone. For some people, that list of possible investors from their friends and family is a long one. For others it’s, well, a short list shall we say.

Often it is difficult to obtain financing from family and friends because they may not fully understand the business or believe it will succeed.

You will really need to do what it takes to convince them the business will be lucrative and successful to get them to invest.

Entrepreneurs are famous for over-selling their ideas to their Uncle Pat and then seeing things not work out. Whatever you do, treat your friends and family no different than you would a savvy angel investor.

They deserve updates, communication and to be one of the first phone calls when there is a problem. You should treat them as the partner you allowed them to become when you accepted their checque.

As for the fools — we’ll leave that one alone.

Banks ready to support startups

Access to finance for emerging new businesses is far stronger now than it has been for years
Access to finance for emerging new businesses is far stronger now than it has been for years

Recent Central Bank reviews of banking sector support for new business have signalled significant improvements in the policies and practices employed by banks in support of their SME customers.

The Irish Banking Federation (IBF) welcomed the Central Bank view that the main Irish banks have developed quality SME loan strategies, that they are in regular communication with SME businesses, and that the banks are not reducing their lending standards in a bid to achieve particular lending targets.

The representative body for the Irish banking sector, the IBF reaffirms that its members remain firmly focused on their regulatory requirements. Nonetheless, the sector is also glad that the Central Bank can see its genuine commitment to supporting viable new business.

The IBF stated that banks remain fully committed to supporting viable businesses. It said the Central Bank reviews have brought welcome confirmation of the range of ongoing work by banks, and affirm the vital role the SME sector play in the Irish economy.

Meanwhile, the Michael Noonan-led Strategic Banking Corporation of Ireland has loaned out €45m to SMEs from March to June alone. Agriculture accounts for a third of all those loans, and 90% of the more than 1,600 loans were investment loans for small business; with an average loan of €27,500.

Most of those SBCI loans are currently managed by Bank of Ireland and AIB, with other banks expected to participate in the near future.

All of the main Irish banks also have their own dedicated new business funds. Bank of Ireland is actively engaged with Kernel Capital, while SMEs can also access the AIB Seed Capital Fund, to name just two options.


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