ŠAVŠ/TAČR Digital Czechia in a Digital Europe
The financing of startups can be done in the following ways: • Investments by the founders of the respective startup • the entry of an investor who becomes a partner of a given startup • the entry of an investor who will require a share in the profits of the company concerned • using available incubators and startup accelerators for the rapid development of the company • the use of crowdfunding financing, in which a number of individuals decide to contribute to the launch of a given startup, provided that the given startup will be able to reach a sufficient number of small investors. 4, 5
Fig. 1 – Source of financing for startups among Member States of the European Union
Source: EU Startup Monitor 2018 http://startupmonitor.eu/report.html Figure 1 shows that the most important source of financing startups in the European Union is the savings of entrepreneurs. On the other hand, startups have absolutely limited access to external financing in the form of bank loans (long-term or short-term) or obtaining funds through an initial public offering (IPO). Government funding is used on average only by 20%. In addition, there are significant differences between the countries of the European Union in the 4 Sedláček Petr, Sterk Vincent, The growth potential of startups over the business cycle, American Economic Review, Vol. 107, No. 10, pp. 3182-3210. 5 Spender John Christopher, Corvello Vincenzo, Grimaldi Michelle, Rippa Pierluigi, Startups and open innovation: a review of the literature, European Journal of Innovation Management, Vol. 20, No. 1, pp. 4-30.
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