Financing your company with personal contributions

Last modified:

Tuesday 7 September 2021

What do we mean by own contribution?

These are funds invested in the company by the entrepreneur(s) initiating the project.  These funds can be invested as capital (if the activity is exercised as a company) or in the form of credit.

The funds can be provided by the entrepreneur directly, or by a company under their control.

The own contribution in the form of credit is generally for activities exercised as a self-employed worker or asbl (due to the absence of capital).

The own contribution is to be considered in opposition to funds from external investors, whether they invest in the form of capital or credit.

This concept of own contribution is not to be confused with the concept of own contribution linked to financing by credit.  

Why a personal investment?

Financing a company represents a real risk.  So, it is logical that the entrepreneur is the first to invest in his project and to bear the risks before requesting external funds.

The personal investment improves the credibility of the project by offering a certain degree of "commitment" from the entrepreneur, and may constitute a lever effect for obtaining additional financing.

If the activity is exercised in the form of a company, the personal investment must also constitute most of the capital if the entrepreneur wants to remain responsible for making any decisions and remain in charge of his/her project. 

What sources of personal investment are there?

Sources directly linked to the entrepreneur:

  • Personal savings held by the entrepreneur. For example: income of any kind (professional, financial, property, etc.) as well as any gifts and inheritance 

  • The funds available (and mobilizable for this purpose) in companies controlled by the entrepreneur 

Sources indirectly linked to the entrepreneur:

  • The funds collected by the entrepreneur from friends and family
    We usually talk about the "3Fs": Family, Friends & Fools.

    These funds, which are loaned or given to the entrepreneur for this purpose, are not generally invested on purely rational, economic or financial bases.  Despite or because of this, the entrepreneur must avoid any misunderstanding regarding the terms of this provision of funds (risk, return, repayment, etc.).

External sources:

  • Loans, public or private, granted to the entrepreneur by external counterparties, for the purpose of helping create a company. Example of a public loan: the start loan from the equity fund

  • Any premiums and grants granted to the entrepreneur for the purpose of helping create a company

In these two examples, the funds correspond to money benefiting the entrepreneur as an individual. These external sources are subject to strict granting conditions and are only used in addition to the entrepreneur's own sources. 

What should I do if I have insufficient personal resources?

It is not uncommon, after a first assessment of the resources required for a company project, for the entrepreneur to realise that he/she does not have sufficient resources to launch his/her business as originally planned.

There are three possible alternatives for this individual:

  • obtaining additional funds through one or more sources of personal funds

  • finding an investor partner, or resorting to external investors (private or public risk capital)

  • adapting the project to the resources available, for example by:

    • reducing its size
    • postponing certain investments
    • opting for less "intensive capital"
    • opting to launch as a self-employed worker rather than a company, etc. 

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