As you already know from the previous article The Box opened doors in August 2018. An important player in this was the funding got from the Start-up nation 2017 program. Although we probably would have managed without the funding, the program brought a handful of benefits. Therefore the aim with this article is to share some the important elements from our experience, especially as the 2019 program was just launched.
The experience we have been through was very useful and probably less complicated than we have expected. To be entirely honest there were some moments when we felt we were buried in documents and bureaucracy, but overall it wasn’t rocket science.
I consider that applying and implementing the project was very important for:
Validating that our plan is achievable
Fist of all, when the applications period opened was the moment that motivated us to start laying on paper our ideas around the gym. This induced a sense of urgency to move from idea to something more concrete.
Most of the discussion that the application document has generated are the basis for what you see today in our box. Moreover, the approval of the project was a validation for our plan and a confirmation that the whole thing might actually work.
Bringing some financial comfort
The fact that we managed to avoid paying around 30K from our pocket certainly brought at least mental comfort and allowed us to direct funds to other investments. The start-up nation funding in the end covered around 40% of the entire investment.
Building a relation with the bank
For us, being at our very first experience with entrepreneurship, it was very important to get close with the bank institution and start understanding its processes. We got lucky and we found the right persons there that helped us through the process with guidance and consultancy.
Drawing a line after the Start up Nation 2017 experience, I would say it’s worth highlighting 5 aspects that would help maximizing the benefits for this program:
1. Hiring a consultant
When considering to write the application our initial thinking was that neither of us have applied to something similar previously, so we should hire a consultant. At this moment I think we would do the same again. The cost for a consultant is not small at all, but the time you save just because he has the ‘know how’ is tremendous.
Theoretically you would say that it shouldn’t take more than a couple of days to write the application, but the truth is .. that you get to the point where you lose much more time for documentation and correcting errors.
2. Taking the bank credit option
Another key aspect and a happy call we made in the beginning was to go with the option of accessing a bank credit that would be covered by the project funding. Besides the kick-off of the relation with the bank, this also helped us to mitigate the risk of delays with receiving the payment from the authority.
There were 3 options that we could have followed:
30 days payment – the provider would have to send us the equipment’s and then after the paperwork is done FNGCIMM (state authority) would send the money directly to them. This in theory is the best option as it moves the entire risk on the provider side, but no provider would agree to it.
Using our own money – to buy everything and then wait for FNGCIMM to pay us back. With the risk that there might be delays and the invested money could be blocked for several months (this happened with some applicants)
Bank credit– you can apply for a credit that is guaranteed by FNGCIMM. With this option the bank does the payment to the provider and you pay a rate of interest of 3.9% yearly until the state authority makes the payment to the bank. All the details and numbers for this approach are below.
The maximum period for the financing is 18 months and cannot extend over the date when the funds are reimbursed by the authority.
0.75% commission payable when the first payment is made
3,9 % fixer yearly interest
Monthly management commission – 0.08%
You can find out more details following the below link: https://start-up.ro/oferte-pentru-credite-punte-de-la-bancile-inscrise-la-start-up-nation/ (only in Romanian)
3. Creating the acquisition list
One thing that we could’ve have done better was the acquisition list. Unfortunately, some of the items in our list were not eligible therefore we have lost some of the funding. One example would be the rubber floor that was interpreted by the authority as venue refurbishment and was not approved, even though its just like any other equipment.
Probably taking more time to speak with FNGCIMM would have helped, either by making sure they understand our point of view or investing those funds in something else.
In the end we managed to recover some of the loss by thoroughly negotiating with the vendor from where we have purchased most of the equipment.
The second aspect where we did not benefit as much as we could was the funding for paying 6 months’ worth of salaries. Due to the delays we encountered with refurbishing the venue and get everything ready for the grand opening we delayed hiring staff to the last moment and thus we lost the funding for 5 months salaries.
Better planning and a bit more confidence that in the end we will make it through and open, would have helped.
5. Submitting the closure file to FNGCIMM
The part that scares most of the people, was not that difficult either. We only had to go back with some clarifications – pure bureaucracy – that didn’t take more than a couple of days. The remaining funds were in our account in a couple of days after everything was clear.
As a conclusion, the project was very helpful for us and we’ll definitely look for other similar options in the future. Even though in the beginning everything looks so complicated, as long as you find the right persons to help, you only need some courage.
The 2019 startup nation program was just launched so it’s the right time to move from dreaming to doing.
Dupa cum stiti deja visul nostru a prins aripi in August 2018, iar un factor determinant a fost finantarea pe care am reusit sa o accesam: Start-up nation 2017. Nu zic ca fara ea nu am fi reusit sa ne descurcam din perspectiva financiara, dar, pe langa bani, ne-a mai ajutat cu bifarea catorva aspecte importante. Asadar imi propun ca mai jos sa impartasesc cateva aspecte pe care le consider importante, cu atat mai mult cu cat programul pentru 2019 doar ce s-a lansat.