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“I want European funds to open a business!”. “I inherited a 3-hectare plot of land in Vatra-Moldovice. Where can I get 40-50 thousand euros to make a deal with him?”. That’s not how things work. A grant consultant explained to BT Stup what are the main mistakes Romanian entrepreneurs make when they start to access European funds.

Around 200 entrepreneurs recently attended a fundraising course held at BT Stup, a business center opened in Bucharest by Banca Transilvania, Romania’s largest bank.

“European funds should come in response to your need. Funding your business should not depend on a single source of funding. Depending on the development grant or where you are in the development of your business, you can use several financing tools” – – said Raluka Preluka, an expert on access to EU funds.

Many Romanians who enter the path of entrepreneurship are frustrated that no one just gives you money unless you also invest your money in your business.

Financial consultant Raluka Preluka listed some common mistakes many entrepreneurs make when starting a business, when they want to take non-returnable money, and gave useful tips:

• 1. Based on (hypothetical) non-refundable funds only. “The cheapest money is your money, your family’s money, your friends’ money. Then you can get various forms of support,” says the consultant. But grants are still support for Romanian business. “Indeed, grants can be a solution for start-up businesses, there are funding opportunities through accelerators supported by the European Social Fund, currently in Romania. In addition to grants, you can also use other tools: you can turn to business accelerators that will provide you with equity financing, you can turn to business angels that will support you if you have an innovative idea that scales and then slowly. slowly, as your business grows, you will be able to access more sophisticated venture capital funding or turn to banks. BT Mic are close to starting a business and you will be able to benefit from these loans.”
• 2. They don’t understand their financing needs. “When preparing for European funding, always consider your needs! Many clients come and say: I have a hectare of land in Vatra-Moldovice, what can I do with it or what do I need money for? And we try to explain to them: what can you do? It is very important to think about your development needs and do what you know”
• 3. They do not put themselves in the place of a financier. Many aspiring entrepreneurs ask what is financed, but they do not try to understand the interests of the financier, whatever they are. “You have to understand a European financier like any other financier. He pursues interests, interests of state policy. If a private financier, such as a bank or an investment fund, seeks to recoup the investment, the European Commission and the Romanian budget seek to achieve certain public policy goals.”
• 4. Look for grants for things that are NOT funded. “Why don’t we get paid? What costs cannot be covered by European funds? Many clients come with needs in the field of operating expenses: salary, rent. In general, European funds do not cover such costs, these costs must be covered from the company’s income. There were some exceptions, especially for startups that received salary money. Real estate also does not qualify, with a few exceptions. There was an attempt at the acceptability of buildings in the context of COVID-19, but the European Commission does not fund. Cars are generally not eligible either. Business development is the last thing a startup should think about, but it also depends on the field. As a rule, they do not have the right, but here too there are exceptions. Fully electric vehicles participated in the last calls. Customers have found that car delivery takes a long time and risks missing the finance contract deadline. Marketing is critical to business growth, but it’s usually not the right fit. You can’t buy used equipment, even resealed, dumped from a truck…”
• 5. I am not looking for financing opportunities. There is no one to pull the sleeve and give irrevocable money. It is your responsibility to educate yourself and create a routine of following your funding lines. “Track funding lines ahead of time! It takes forever to get European funds, and many clients have factored in the opportunity cost as well. Sometimes it takes 2 years for European funds to come in, and you need to think if that wait makes sense for where your product and your development plans are,” Raluka says.
• 6. They assume goals they cannot achieve in projects. “Don’t think about things that don’t make sense for your business! You have to think that no matter how optimistic you are, you have to succeed after that. Try to be honest with yourself, because after that, you’ll also be the one pulling the plug if you don’t meet those metrics.”
• 7. Be careful which consultant you choose! The consulting market is large, there are many consultants who work together with entrepreneurs for the success of a financial campaign. But there are also speculators among consultants who sell illusions to budding entrepreneurs, demanding sums from them in advance, realizing that the chances of financing are zero. “I have seen so many cases where people complained that they were stopped by some consultants. Always check the person you are talking to, ask for references, ask for phone numbers of previous clients, talk to those clients, ask them how the implementation went, and sign a solid contract with the consultant, i.e. insert clauses in the contract that protect you, i.e. always try to make sure this consultant takes a risk with you!” – this is Raluca Prelucă’s advice.
• 8. He refuses to take risks. At the opposite pole are entrepreneurs who refuse to take risks because of the possible inability to finance their business. “Don’t make the consultant bear all the risk! A consultant can’t take all the risk: OK, you don’t pay me if the project doesn’t win. We risk together, the consultant’s duty is to honestly assess the chances of winning and share this risk, but the risk should never be on one side. Ask for references and don’t give money without getting anything in return, I understand this is happening all over the country, there are people paying up front with nothing in writing, not even having a line of financing that they talked to a consultant about that exists !” .

See the schedule of events at the Stupa and sign up as soon as you find free places!

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