EUROPEAN PROPTECH GUIDE – FINANCING STRATEGY

We have defined five different sources of financing; (i) equity, (ii) BA & Crowdfunding, (iii) financing rounds, (iv) public financing or bank loans and (v) others. Our analysis shows that, depending on the state of the startup, it will leverage on one or other source of liquidity.

 

 

In the first phase, where the project is usually still practically a concept, the main source of funding is, in most cases, self-financing (48%) or the participation of Business Angels (BA) or crowdfunding platforms (30%). It is in these early stages where we miss more support from institutions, which are present at a low percentage.

 

 

In the early phase, when a Minimum Viable Product (MVP) has already been developed and the startup is usually close to generating its first revenues, the startup receives in its cap-table, according to 36% of those surveyed, the first Venture Capital (VC) or Corporates (CVC) funds.

 

 

It is in the third stage, where growth channels are consolidated, when the contribution of the startup itself and the BAs is no longer sufficient, leaving room for financing rounds to consolidate as the main source of liquidity (54%).

 

 

Finally, after a long process of natural selection, those that have finally reached the maturity stage and achieve high levels of profitability, turn to their own profits as the main source of capital.

 

 

 

“EQUITY AND ROUNDS OF FINANCING ARE THE MOST FREQUENTLY USED SOURCES OF LIQUIDITY”

 

 

Graph below: Main sources of liquidity by phase

 

 

 

Graph below: Evolution of a startup according to its life cycle

 

 

The CBRE PropTech Team

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