For those of you who are planning to open a start-up in the field of technology, we have good news! Besides the usual options of bank loans or getting business angels on board in exchange for equity, investment funds are a good alternative for start-ups in need of capital. One such fund, has recently started operations in Europe and is on the lookout for up and coming tech start-ups.
Firstly, it is important to understand the basics of dealing with investment funds, which could help you choose if this type of capital injection in your business is suited to your future company’s needs.
First of all, profitability is the most common indicator to compare investment funds. However, this indicator only reflects the past performance of the fund, so it should not serve as your only benchmark.
Second, it is also relevant to read the prospectus of the fund or its annual reports, which explain its objectives, fees and commissions and the investment and risk strategy that should be made available to you free of charge.
In addition, the costs incurred by the fund are another important element. The fees charged by the company that manages the fund must be taken into account to estimate its performance. The higher the fees, the lower the performance of the fund will be.
New investment fund for tech start-ups
If you are on the verge of starting a new business in the tech sector you can check out European Seed and Series A instruments provided by the fund set up by Paua Ventures. The fund will provide new companies that will seek support a total of 45 million dollars.
The German company wants to invest in more than 20 start-ups in the next 3 years in countries such as Germany, Switzerland, Austria, the Nordic countries and Central and Eastern Europe.
The activities of the start-ups that want to benefit from the fund may include, but are not limited to Software-as-a-Service, B2B mobile, e- commerce 2.0 or B2C mobile. Paua Fund has several partners and institutional investors such as the European Investment Fund, entrepreneurs and major industrial groups, such as Klöckner & Co. SE. Paua invests in seed and Series A rounds, typically between $200.000 to $2 million per round and it has deployed roughly $9 million to date.
You can read up on Paua and their portofolio and succesful exits on their website – http://www.pauaventures.com/.