To take off, a business needs fuel. And this fuel, it is the money which it is necessary to seek. The first vigilance will be to not carry all the financial risk on your shoulders. The entrepreneur already devotes a lot of energy and time to his project, sometimes putting part of his personal life on hold. “If in addition he bets everything, on his own, he will bear particular stress which will have a blocking effect on his decisions for fear of losing everything”, estimates Alexandre Mars.
At the start, if possible, you can appeal to the family (this is called “love money”) and then expand the circle of lenders or investors to your friends and then to your friends’ friends. That’s how Bertrand and Mathilde Thomas launched their Caudalie cosmetics business in 1995.
Very young and inexperienced at the time, they didn’t even try banking, considering their chance of convincing was nil. To take their first steps, they turned to their relatives who lent 100,000 francs, then a few months later 200,000 francs. In 5 years, they borrowed 2 million francs (300,000 euros) mainly to create their first Spa in Bordeaux. Everything will be reimbursed in 2002, as told by Alexandre Mars in his book “Ose! »*.
+ VIDEO / Excerpt from Alexandre Mars’ masterclass on Go Entrepreneurs Paris (April 2022)
Beyond grants, investors
Local and regional aid, Bpifrance… In France, the possibilities of subsidies are also legion. But at some point, especially in BtoC activities, the business creator will have to call on a financing professional whether he is a banker, business angel or investment fund. Of course, an artisan baker will not be dealing with the same interlocutor as the founder of a self-service scooter rental service. For innovative young shoots, if the income can sometimes be there quickly, profitability will generally not be achieved for five years. It is therefore not the traditional banker who will be the most inclined to grant them financing but rather a business angel or a venture capital pro investing at the start-up stage for small amounts.
However, regardless of their specialty in terms of sectors, these investors will only trust you on the basis of serious guarantees. Several fundamentals must be respected in order to have a chance of seducing them. All take into account multiple criteria starting with the famous business plan reflecting the strategy implemented over several years. Customer target, distribution channels, customer acquisition costs, available equity, future financial needs, revenue forecast, etc. will be scrutinized. The profile of the entrepreneur(s) will be scrutinized.
In general, investors are wary of “solo” and prefer teams of two or three partners whose skills are complementary. And if in addition these founders have had other entrepreneurial experiences in the past, it is a serious asset. A new fact is that more and more financing structures, such as Alexandre Mars’ Blisce fund, examine the social responsibility of the requesting company. Does she engage in one way or another for the common good? Does it take diversity into account in its recruitment? Does it select its suppliers based on ethical and environmental criteria? For these committed investors, social responsibility is no longer a simple checkbox but a condition of the project’s long-term viability.
* “Dare! Everyone can become an entrepreneur”, the book by Alexandre Mars published by Flammarion / Versilio, 255 pages, 18 euros, published in January 2020.