Start-up investment

Under a founding investment is understood in business administration investments in tangible assets involved in the business start-up traffic.

General

Capital investments can be divided into foundation, expansion , replacement or rationalization investments according to their purpose . Of these investment purposes, the start-up investment, along with the expansion investment, is the riskiest because the other types do not change the size of the farm and are more or less inevitable. In addition, start-up and expansion investments increase the amount of capital tied up. Start-up and expansion investments have a capacity-increasing effect, which changes company revenues and total costs .

species

Start-up investments are preceded by an in-depth market analysis , which shows the scope of the investments to be made. The initial size of a company in its first company phase is determined by the scope of the start-up investment. Start-up investments can concern land to be used for business purposes , land rights , buildings , technical systems and machines , equipment or operating and office equipment . Their acquisition causes acquisition costs , which flow into the asset accounting as investment costs . Intangible investments (e.g. in concessions , licenses , patents , property rights , brands , acquired goodwill or research and development ) or financial investments ( e.g. equity investments ) are included in the broader term of start-up investments .

reasons

The basis of investment decisions is the marginal efficiency of the capital employed. An entrepreneur will only invest when the marginal efficiency of capital exceeds the current market rate. If an investment generates a higher return than an alternative financial investment , it is invested and vice versa. With the expected service life of a machine to be purchased of 2 years, the following formula results:

{\ displaystyle AK = Q_ {1} + {\ frac {Q_ {2}} {1 + R}}}

Here are the acquisition costs of the investment Net income of the investment in the first year Net income of the investment in the second year Marginal performance of the capital (return on investment)
${\ displaystyle AK}$
${\ displaystyle Q_ {1}}$
${\ displaystyle Q_ {2}}$
${\ displaystyle R}$

For example, if a machine costs 1,000 euros with a two-year service life and the entrepreneur expects 500 euros in the first year and 540 euros in the second year net income from the machine, the result is a marginal performance of 8%. If the market interest rate is 7%, investments are made; if it is above 8%, the investment is not made.

Effects

Start-up investments determine the initial quantity of production factors, should be based on the expected market potential and avoid possible operational bottlenecks . As a rule, they relate to property, plant and equipment (factor operating resources ), in the case of labor- intensive companies to personnel (factor work ). As a rule, when the equipment is used for the first time, there is also an increase in personnel capacity, because machines have to be controlled or monitored by people. The fixed costs arising from the start-up investment ( depreciation , fixed personnel costs ) must be covered by the contribution margins of the quantity produced. Another consequence of founding investment is a stockpiling of raw materials , consumables and supplies , so that a production can take place.

In terms of the balance sheet , start-up investments lead to an asset swap when financing is available , because they are paid for from liquid funds - given internal and external financing . A further source of financing can be contributions in kind , for example if an entrepreneur makes land from his private assets available to the company to be founded free of charge. Kind lead to the increase in total assets since the land to activate and the capital contribution as equity to passivate are. All investments following the founding investment, namely the expansion, replacement and rationalization investment, are also referred to as follow-up investments .

literature

Christian T. Wolf: Entrepreneurial finance in capital-intensive company start-ups. Consideration of financing concepts from an original and derivative start-up perspective . Kovac, Hamburg 2013, ISBN 978-3-8300-7050-4 .

Individual evidence

↑ Günter Wöhe , Introduction to General Business Administration , 2013, p. 478
↑ Bernhard Felderer / Stefan Homburg : Macroeconomics and new macroeconomics , 1989, p. 110 f.

[1] Günter Wöhe , Introduction to General Business Administration , 2013, p. 478

[2] Bernhard Felderer / Stefan Homburg : Macroeconomics and new macroeconomics , 1989, p. 110 f.