• Knowing the steps to financing your project.
  • Being able to identify the sources of financing.


  • Introduction.
  • Steps and sources of financing.
  • Practical activity.


Financing your green enterprise is key to turning your project into reality. The good news is that green or sustainable business is in the spirit of the times. As stated by Frans Timmermans, Executive Vice-President for the European Green Deal :

The necessary transition towards climate-neutrality is going to improve people’s well-being and make Europe more competitive.

Thus, it’s important to know the different sources for funding your project and financing your green enterprise.

On one hand, if you start a business and you need capital, there are several things that you will need according to Burk and Lehmann (2004):

  • A feasibility analysis to determine the viability of your idea.
  • Corporate organizational documents (articles, bylaws, minutes).
  • A summary business plan (or at least an executive summary).
  • Federal (and perhaps state) tax identification numbers.
  • A corporate bank account.
  • Local licenses (if required).

On the other hand, if you have already started a business using your own capital, you may need additional capital to:

  • Lease office space.
  • Purchase office equipment.
  • Develop a prototype of your product.
  • Hire a president, chief operating officer (CEO), or chief financial officer (CFO).
  • Design a logo to establish a branding and marketing program.
  • fFile for trademark or patent protection on intellectual property (IP).
  • Pay yourself a salary.

2. First step: making a business plan

Making a business plan and an executive summary will help you both to have a better view of your project, by identifying your needs and strategy and to convince investors. The business plan is a document that gives the layout of your project and it should be a living document that changes and it is a work in progress. It is confidential although it has to be shared with potential investors. The executive summary is less detailed and can be shared as well.

The business plans take two different forms: one is the plan you write to raise capital and the other is the plan that represents the ongoing evolution of your business. (Burk and Lehmann, 2004). There are several resources and business plan software such as BizPlanBuilder (www.jian.com), https://www.sba.gov/ or classic works such as the book the Venture Capital Handbook by David Gladstone.

A business plan allows you to address issues such as the benefits and the advantages of your products or services, your market opportunity and marketing plan, and how you intend to capture a defensible share of the market. The main goal is to elaborate a business plan that convinces the clients and the investors in order to look further.      

3. Knowing the sources of financing

Several sources of financing exist, as follows:

  • Own funds (boot-strapping).
  • Public aids.
  • Business angels.
  • Crowfunding.
  • Debt financing.
  • Interest-free loans.
  • Bank loans.
  • Green finance.
  • Risk capital and initial public offering.

4. Financing the start of your enterprise

The first source of financing consists of your own funds as the enterprise creator, or the partners’ own funds if you are several associates. Getting help from your friends and family: what is referred to as « love money » consists of grants and loans that your friends and family invest in your green enterprise.

Public aids

Public aids can finance your green enterprise at several levels:

  • Local.
  • Regional.
  • Nationa.
  • And European level (Horizon Europe, LIFE, FEDER, etc.).

Public aids can be requested from the creation of your green enterprise and can serve as a leverage effect to attract other investors.

In addition, there is a technical expert group on sustainable finance (TEG) which assists the European Commission in the development of a unified classification system for sustainable economic activities, an EU green bond standard, methodologies for low-carbon indices, and metrics for climate-related disclosure.

The Member States expert group (MSEG) gathers financial markets and environmental experts from the Member States. It is an advisory role and it was created in 2018 as part of the European Commission’s action plan on financing sustainable growth. 

Business Angels

Business Angels are independent individuals who invest their own money in young enterprises with innovative concepts and high growth potential and bring their expertise, advice and support throughout the project. You can find a business angel through national networks, federations or associations. Participating in green financing events is also useful. 

There are different types of business angels such as retirement investors, value-added investors, professional angels, manager investors, entrepreneurial investors, socially responsible investors, family investors and barter-based investors.


Crowdfunding is a form of funding that brings together on Internet platforms project owners and individuals willing to give, loan or invest money.

In addition, there is equity crowdfunding which is similar to other crowdfunding platforms but instead of making a donation in order to finance a business, you get ownership in a startup. It is a way of democratizing venture capital investment but some investments in early-stage startups can be very risky due to several reasons:

  • Startup success is often binary.
  • New technologies often fail.
  • Adverse selection problem.
  • You can’t resell your investment.
  • Information may be limited.

Some of the best crowdfunding platforms for green investing are Wefunder (good selections of green startups), StartEngine (easy screens for green startups), Republic (third largest crowdfunding platform) and AngelList (Good selection of green startups to invest in).

Loans and debt financing

Interest-free loans are granted personally to the creator of the enterprise for the initial capital. They are coupled with bank loans to create a leverage effect. Bank loans can be requested at the creation of the enterprise, for the medium and long term for investment, operating cycle and cash flow.

Green finance: loans for green enterprises and projects

Green bonds, sustainability bonds and loans and sustainability linked loans (or ESG-linked loans) are financing options part of green finance for private firms and public entities to support climate and environmental investments. They allow enterprises to borrow large amounts of money to invest in green projects or technologies.

A green loan should be structured in alignment with the Green Loan Principles : 

  1. Use of proceeds.
  2. Process for project evaluation and selection.
  3. Management of proceeds.
  4. Reporting.

These Principles address how to implement use-of-proceeds-based finance through bonds and loans. (The World Bank).

«Developing countries currently account for just $1.6 billion of the estimated $33 billion in outstanding green loans. But the market is growing rapidly, outpacing the growth of the green bond market in the near term.»

Risk capital and initial public offering

It’s possible to call on investment funds that will buy equity or shares of your green enterprise, which is called risk capital and venture capital. The initial public offering can come as the last step of financing and allows for larger capital raising through the stock exchange.

For more information on how to fund your business idea, we recommend you watch these videos: 

What do you want to know about funding: https://www.youtube.com/watch?v=VDT44_DGbGc.

Funding strategies: https://www.youtube.com/watch?v=MuTdS29M1o4.

How to raise your first round of capital: https://www.youtube.com/watch?v=aNfB4sBBwEc

Practical activity: make a mapping of the actors in your country

Try to find and make a map of the different stakeholders and potential investors (individuals, relatives, private banks, public investment banks, investment funds, etc.) in your country who can help your green enterprise.

Further information

The Enterprise Europe Network (europa.eu).

The Access to finance – Your Europe (europa.eu).

The European Circular Economy Stakeholder Platform | A joint initiative by the European Commission and the European Economic and Social Committee (europa.eu).

James Burk, Richard P. Lehmann – Financing Your Small Business (2004).

Overview of sustainable finance (https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/overview-sustainable-finance_en).

Sustainfi (https://sustainfi.com/articles/impact/green-equity-crowdfunding/).

The World Bank (https://www.worldbank.org/en/news/feature/2021/10/04/what-you-need-to-know-about-green-loans).