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Looking to get your startup funded in 2019?

How to raise funding
in the new normal

If you were looking to raise funding for your startup or scale-up, prospects might have turned a bit darker in the short-term. During this COVID19 crisis, potential new customers and investors are postponing meetings and decisions. Actual customers might be pending their payments… It seems unlikely that the initial revenue targets you’ve set for this year will be met. Your required runway will probably be longer than expected, thus your funding need might also increase. Costs will have to be managed to ensure liquidity and in the long run the solvability of your company. Some prospect investors are currently adopting a “wait & see” strategy. They want to see what remains standing after the virus has eliminated the “weakest links”, and curb the high valuations that we have been witnessing.

The Covid-19 crisis entails different challenges for different startups. For some, immediate cash flow issues might emerge, for other new opportunities. Both need to be managed accordingly. The good news is that there is plenty of money available for startups in the market. Investors are still actively looking for good opportunities. What you can do now as an “agile” entrepreneur, is show how you adapt to these changing circumstances.

What are the immediate actions to safeguard your current business operation?


  1. Focus on your key financial metrics including receivables, burn rate, and runway in the new environment.
  2. Renegotiate payment terms with suppliers and “cash-rich” customers e.g. offer a discount if they pay faster. This entails both renegotiating what seemed like fixed expenses (e.g. rent, equipment) and reducing your variable expenses (bonuses, travel).
  3. Make use of the temporary unemployment measure to save on payroll costs.
  4. Delay government tax payments.
  5. Look where you can cut costs & bootstrap where you see fit. Curtail your spend on anything that is not key to your “survival”.
  6. Adjust your business model and corresponding financial plan and communicate them clearly to your investors and employees. Small pivots will prove attractive to investors down the line as they layout your resilience.
  7. Lastly, an investor is always interested to see how you managed a crisis. Startups that come out strong, or prove themselves to be innovative yet resilient, will surely shine in the eyes of an investor.



What are investors currently doing?


  1. The priority has shifted from deal-making and towards supporting their existing portfolio companies.
  2. Defining their post-corona strategy: Investors aren’t expecting the economy to snip right back. Therefore, they are signaling a return to more sober business metrics.
  3. The flight to quality will have an impact on your valuation as a company. Therefore, as in every major downturn, inflated valuations will disappear. Most investors will be negotiating lower valuations with companies using a “Corona discount factor” of +- 10-20%.
  4. Nevertheless, investors are still assessing new opportunities, but expect the pace of current investments to slow down.


Where can you get funding?

The type and size of funding you can get access to will typically depend on the size and stage of your company.

Often a smart combination of multiple sources can lead to a larger runway and also higher credibility. Setting up an appropriate financial mix that matches your business plan allows you to raise smart money with lower equity risk.



Your customers remain the single most important source of financing for your business. This displays credibility because it shows that your product/service is in demand and that you can still close deals during difficult times. On top of that, you do not have to give up any equity. In turn, you’ll enjoy a stronger bargaining position when negotiating (valuations) with investors. Also consider alternative ways to increase your working capital. Factoring solutions like Edebex for instance, will allow you to receive your money within 3 days (at a discount factor), provided that your customer is deemed credit-worthy.



Family, Friends and Fans/Fools (FFF)

With almost zero interest rate given by the banks, you can try to activate the savings of family, friends and fans via the “Win-Win” loan from PMVz. Due to the issues, the government has increased the amount you can borrow up to 300,000 EUR with your company at very low-interest rates over a period of 5-10 years. The government covers a part of the interest rate to make it interesting as an investment opportunity and also provides a 40% tax credit in case the company goes bankrupt. A useful platform that matches investors and entrepreneurs is the WinWinner crowdlending platform.


Flemish Government Financing Options

PMV(z), or Participatiemaatschappij Vlaanderen, has a large number of financial support measures in place for entrepreneurs such as the “start loan (up to 100,000 EUR), co-financing (up to 350,000 EUR), co-financing plus (up to 700,000 EUR), or the guarantee measures for bank financing which have been expanded due to the crisis. This corona loan is essentially a 3-year subordinated loan of a minimum of 25,000 EUR and a maximum of 2 million EUR (which can be extended to 3.5 million EUR with an additional investor). The conditions differ depending on the stage you’re in.


Bank Financing

In normal circumstances, bank financing is one of the most accessible and cheapest forms of financing for startups, provided you can show a “pay-back capacity”. Febelfin (i.e. The Federation coordinating the Belgian financial sector) has launched several initiatives to ensure the continuity of this type of financing. These include deferred payments of existing capital repayments to the bank up to 6 months (no later than 21 October 2020), new bridge loans issued with a maximum term of 12 months, and the PMV subordinated loans for a 3 year period. To apply for these loans, it is critical to have a sound financial plan taking into consideration the impact of Covid-19 on your business.



There are also a lot of Flemish government subsidies you might be eligible for. VLAIO has a wide range that you can check online. The majority that is being used by startups & scale-ups are the KMO-portefeuille, SME Growth Subsidy and the Research & Development subsidies. Though it is “free money”, it will be a long process before you “might” get a government subsidy approved and even longer until you actually see the money. Take into account at least a couple of months before you will see the first Euro when embarking on this journey. VLAIO will also always ask a contribution from the entrepreneur or existing investors to cover the costs. E.g. for an R&D project, VLAIO will only cover 45% of the budgeted costs so you will still have to bridge the other 55% from another source.


Angel Investments

Business Angels are wealthy individuals who want to invest their time & money in new ventures in exchange for equity. Usually, these are people who have had a long career behind them with a lot of expertise and a large network. In addition, In Belgium, the Tax Shelter for startups & scale-ups regime provides a very interesting opportunity for people that earn (or have earned) a substantial amount of money. Per person, you can invest up to 100,000 EUR per year in a startup and deduct 45% of the amount on your personal income on which you are taxed. This might be a good time to proactively approach some people in your network that you know that might meet the criteria. Moreover, you can go to BAN Vlaanderen and participate in one of their online pitching sessions to a network of over 200 business angels.



VC Funding

Last but not least, you can still (try to) raise VC funding. However, there is one crucial question that you need to ask yourself first: do you really need or want VC money? Are you self-sustainable already? Can you grow organically? For some, this might be a no-brainer, but be fully aware that by accepting VC investments in your company, you will give up some ownership and control of your company to someone else. Do you need to grow big and fast and need funding for that? And are you the type of entrepreneur that has these ambitions? Then it may make perfect sense. Just be aware that once you take on the investments, YOU will be held responsible for the fate of the company by your board and investors. If things go south, you will need to face the consequences.

Proper Preparation

If you still said yes to all previous questions, a great place to start is the overview of Venture Capital investors in Belgium made by VLAIO. Make sure you understand the business model of a VC fund. They have a mandate to invest other people’s money with an expected return following a certain investment strategy within a limited time-frame. Do your homework and make a list of the investment funds where your startup might meet the investment criteria. If you want to reach out, the best way is via an introduction through a source they already trust so you get to the top of their inbox.

VCs receive a lot of emails so be respectful of their time and provide them with a 1-or 2-page investment teaser in order to secure your first meeting. Make sure you are well-prepared with a pitch deck that contains all (or most) of the required information that the investor might ask questions about. Make sure you get yourself a good advisor when it comes down to the details of the term sheet. You will set out the conditions that will either positively, or negatively, impact subsequent investment rounds and the potential “exit”. A pre-made data room containing relevant information will make your life and the investors’ easier during the due diligence. It also shows your professionalism and will also increase your chances considerably.

The “easiest” way to raise VC funding is by quickly being able to generate a lot of recurring revenue. If you are able to achieve this, VCs will probably start contacting you instead of the other way around.


We help you raise funding!

The Factory supports entrepreneurs in adapting to the new environment, leveraging our expertise to help support your business and raising funds. We guide you through every step of the way: from building a financial plan to negotiating the term sheets. 

If you need more information or support to help grow your startup and get access to funding, drop our startup support team a line, or come and join one of our working sessions.

Glenn Gezels
Sam Michem

EY The Factory

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