Build the perfect funding mix for your tech growth

For young, ambitious CEOs and CFOs in the tech sector, growth is an absolute necessity. But financing that growth requires a complex strategy. Whereas the start-up phase is still dominated by the search for venture capital to validate a minimum viable product (MVP), the rules of the game change drastically once the scale-up phase begins.

The biggest strategic mistake? Sticking to a static financing strategy. A healthy capital structure for tech companies in Flanders evolves in line with your growth phase. By building a dynamic financing mix – comprising own funds, risk capital, subsidies, leasing, bank financing and working capital optimisation – you keep control of your cap table and cash flow.

Optimise first, then raise capital: the internal fuel cell

Before you enter the capital market and give away valuable shares, it pays to take a critical look at your internal resources. "Every euro you free up internally is one you don't have to raise externally," says  Stéphane Vermeire (Head of Corporate Banking at BNP Paribas Fortis) during his keynote speech at the Odoo Experience.

Many fast-growing companies focus so much on sales that they put pressure on their cash flow. The Cash Conversion Cycle (CCC) is the time it takes a company to convert investments in stock and other operating assets into cash through sales. By actively shortening this cycle – including by accelerating your accounts receivable management and strategically spreading outgoing payments – you immediately create additional working capital.

3 operational rules of thumb for internal optimisation:

• Early hardware lease or rental: the direct purchase of IT infrastructure or business assets absorbs cash. Leasing preserves cash for R&D and recruiting the right talent.
• Use Trade Finance when internationalising: as soon as you cross the border, payment risks increase. Trade finance instruments protect your cash flow and cover these risks.
• Match maturities: never finance long-term assets with short-term loans. This is one of the fastest ways to get into operational trouble.

The financing matrix: from start-up to scale-up

After the internal optimisation, the search for external financing gets started. Which tools do you use, and when? We’ve outlined the three phases for you:

1. The start-up phase: equity is indispensable

In the early stages, when there is a lack of predictable cash flows and material collateral, traditional bank financing is not yet an option. After all, your bank needs predictability and cash flow to justify credit risks. Here, equity is the main driver. In addition to own funds and the well-known Friends, Family & Fools, business angels and seed funds (such as PMV in Flanders) play a key role. They bring not only capital, but also a network and expertise. Crowdfunding can also be a powerful tool for product validation and marketing, although Stéphane Vermeire also warns of the downside: “It’s intense and highly competitive and leads to reputational risks if the campaign fails.”

2. The scale-up phase: the art of conducting the orchestra

Once you have achieved product-market fit and turnover starts to increase exponentially, you enter the scale-up phase. This is the stage where the financing mix proves its true value. In addition to larger venture capital rounds and private equity (minority interests), alternative debt instruments are now also coming into play. Ultimately, the key lies in the combination of equity and debt. By complementing risk-bearing capital with venture debt – a type of loan designed specifically for fast-growing tech companies without traditional collateral – or banking working capital solutions (such as factoring and leasing) you prevent excessive dilution of your shares.

3. The mature phase: scale-up, acquisitions and institutional capital

When your business is established  with stable, predictable cash flows, the focus shifts to global scale, strategic acquisitions or long-term sustainable anchoring. In this mature phase, the company has sufficient collateral and historical data to address the more complex financial structures. This involves instruments such as private equity (for major buy-outs or majority interests) and syndicated loans, where several banks join forces to finance large-scale investments. For companies with global ambitions and a mature market model, an IPO or securitisation is the ultimate step towards institutional and public capital.

A look behind the scenes: the Innovation Hub in action

What does this coordination look like in practice? As Innovation Hub Manager, Jill Caubergh advises tech entrepreneurs on their optimal financing mix on a daily basis. "Entrepreneurs often look too one-dimensionally at their financing," she explains. "At the BNP Paribas Fortis Innovation Hub, our role is to see the bigger picture and put together the right pieces of the puzzle."

Using 2 concrete case studies, Caubergh explains how this mix makes the difference:

Case 1: Financing the growth of a tech company without dilution

"One of our customers is a fast-growing Belgian tech company that develops modular AI hardware and edge computing solutions. They faced a classic challenge: hardware production requires heavy upfront investment in components, yet customers only pay afterwards.

Instead of setting up a new, diluting capital round, the Innovation Hub helped establish a working capital structure. By cleverly combining leasing for the hardware components and factoring to turn outstanding customer invoices into immediately liquidity, the tech company was able to finance its operating cycle while retaining the share capital in the hands of the founders."

Case 2: Water treatment: industrial scale through private equity and GTS

"Another customer, a pioneer in innovative membrane technology for industrial water treatment, needed capital to scale up its international production capacity and win major overseas contracts. A deeper capital structure was needed as a solution. The Innovation Hub connected the company with suitable private equity partners for the strategic capital injection. At the same time, the expertise of Global Trade Solutions (GTS) was brought in. Thanks to international bank guarantees and trade finance solutions, they were able to present the necessary credibility to major foreign industrial customers, which opened the door to a global scale-up trajectory."

The bank as a strategic growth partner

"As a bank, we do much more than just lending," notes Caubergh. "We act as a strategic sparring partner. We advise on the structure and timing of your financing, and we open the doors to our broad ecosystem of investors and international networks." BNP Paribas Fortis has 9 Innovation Hubs in Belgium with a specialised team of relationship managers in each province. In total, there are more than 500 start-ups and scale-ups in the portfolio. This expertise allows us to work with you to design the financing mix your tech company needs to reach the next level. Learn more about our strategic vision for startup & scale-up financing to define the ideal growth roadmap for your business.

Every legendary tech unicorn started with nothing more than an idea, a passionate team and the right fuel at the right time. Let the right financing mix drive your success. 

Would you like to discuss the financing mix for your business or scale-up in detail and discover how to strategically accelerate your growth plans? Contact us for a no-obligation consultation.