Many opportunities in the short and long term
An entrepreneur often has a desire to make his organization thrive. In the current era, there are several sectors where this seems to be easier than in others. Data Science is one of the sectors where both entrepreneurs and investors see a lot of short and long term opportunities. When you have a Data Science company, your need to grow can come from several factors. We list the 4 most common drivers for growth and the correspondingfunding mix.
Personnel & Marketing
To be able to grow as an organization, there must be growth potential in the organization. Two important drivers are staff and marketing. However, to be able to deploy these two, capital is needed. Personnel and marketing are in most cases financed byequity. When increasing equity, capital can be paid into the company as a grant or in exchange for an equity stake.
Software development
Revenue driven by data often comes from innovative software applications. Software development is of course carried out by personnel. The Research and Development Promotion Act (WBSO) is a tax scheme of the Dutch Ministry of Economic Affairs to promote Research & Development. Via the WBSO, companies and self-employed persons can receive an allowance for the wage costs of employees working on R&D projects. A WBSO subsidy can therefore make it attractive for entrepreneurs to invest time in innovation, because these costs are reimbursed by the government.
Working capital advances
Work in progress and debtors reduce the liquidity of the company. In order to be able to grow, it is therefore important that this does not impede the company's growth strategy.Factoring could offer a good solution. In factoring, debtors are actually sold to a third party and the factoring company finances based on invoices sent by the company.
Takeover
You want to expand your business. This can be done through organic growth. When organic growth does not offer the speed that is desired at that moment, the company can grow byacquiring another company. This is called the Buy & Build strategy. A Buy & Build strategy consists of taking over another company and then incorporating it into your own company. By merging two companies, increased efficiency can be achieved. Two companies together can share costs and achieve synergies that would not be possible separately.
There are therefore several motives for growth. Each motivation requires a different form of financing.
Do you need help choosing the right funding mix for your next move?
