It can be very beneficial to finance a small or medium-sized enterprise because most of them lack funds to grow. To boost growth, it is necessary to encourage the creation and development of innovative companies. However, almost half of SMEs / SMEs have difficult access to finance. The role of savers is therefore crucial in supporting young companies with high potential, but they are not well-informed about investment opportunities in start-ups or think that investments are too risky and not very profitable. Yet there are many advantages to investing in the start-ups.
1. Job Creation
By investing in these companies, investors contribute to the creation of jobs and the added value of the economy. The activity of private equity firms, professional financing of unlisted companies, proves that financing start-ups is good for growth. Between 2009 and 2014, companies with risk capital created nearly 315,000 jobs (destruction of 123,200 for the commercial sector). The growth in the number of start-ups receiving capital funding was 25% and 89% of the hires were concluded on a permanent contract.
2. Profitable Investment
Today, the yields of the various savings products are low and continue to decline. Although investing in start-ups is more risky, achieving significant capital gains is not uncommon. They can represent 5, 8, 10 times or more the initial amount invested!
Private equity figures provide an overview of the potential return on investment in a start-up. These companies are increasing so much so that in 2015, 78% of the companies they financed were small businesses (57% in 2014). Individuals can trust the intuition of financing professionals with a long experience in project selection.
3. A Boon to Tax
Since January 2015, the obstacles hampering the creation of holding companies have been abolished. It is now possible to combine in a single vehicle a multitude of small individual carriers wishing to bring funds to a start-up and benefit from tax and insurance advantages.
European countries make it easier so that by investing in young companies, individuals have the option to tax up to 18% of the amount invested on specific state bodies. In addition, a new type of securities account was created in France and a few other countries, which allows investors to hold shares of unlisted companies, such as start-ups, and to be exempt from taxes on income generated.
These measures seek to democratize the access of non-professionals to investment, including savers who do not have large assets and therefore directly support the country’s economic growth.
Beyond all the good rational reasons outlined above, the highlight of the investment in start-up is to integrate an exciting entrepreneurial adventure. The investor brings not only financial resources, but also all his/her experience, network…
Strong relationships are established between the project promoters and its funders, who are fully involved in the project, which cannot be found when investing in large groups. And it is no longer even necessary to be an expert in finance. Innovative solutions such as crowdfunding allow everyone to invest in start-up capital from small sums. There is no more excuse!
