Alternative Financing for Startups: Beyond Venture Capital

Last updated: 5 August 2026.

Quick answer. Beyond venture capital, startups can access several alternative financing sources. Crowdfunding is divided into equity crowdfunding, where investors receive shares in the company, and crowdlending, where investors lend money in exchange for interest; platforms are governed by Regulation (EU) 2020/1503 on European crowdfunding service providers for businesses and must register with the Spanish CNMV, complying with transparency and investor-protection standards. Public financing is also available: ENISA, a Spanish public entity, grants equity (participative) loans to startups and SMEs at different stages of development, and other bodies offer participative loans or subsidies subject to specific criteria. Entrepreneurs should understand the legal and financial implications of each instrument before launching a campaign.

Startups and digital companies need flexible sources of funding tailored to their specific needs. At ILP Abogados, we understand the importance of exploring beyond traditional venture capital to ensure the long-term success and sustainability of your business. Find out how we can help you access various financial alternatives and make informed decisions for the growth of your startup.

Crowdfunding

Crowdfunding is a funding model that allows companies to raise funds from a broad base of people through crowdfunding platforms.

Broadly speaking, crowdfunding is divided into two main categories: equity crowdfunding and crowdlending.

In equity crowdfunding, investors receive shares in the company in exchange for their investment, which gives them ownership rights and the possibility of making a profit if the company is successful. In crowdlending, investors lend money to the company in exchange for a financial return in the form of interest on the loan.

The legislation applicable to crowfunding platforms is Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European providers of crowdfunding services for businesses, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937.

Crowdfunding platforms must register with the Comisión Nacional del Mercado de Valores (CNMV) and comply with certain transparency and investor protection standards. In addition, specific regulations have been developed for each type of crowdfunding, ensuring the security and legality of transactions.

Crowdfunding has proven to be an effective source of funding for startups and companies in Spain, offering access to capital in an agile and flexible manner. However, it is important that entrepreneurs understand the legal and financial implications before embarking on a crowdfunding campaign, and seek appropriate advice to ensure regulatory compliance and protection of the interests of all parties involved.

Public enterprises and equity loans

ENISA (Empresa Nacional de Innovación SA) is a public entity in Spain that is dedicated to providing financing to companies at different stages of development, including startups and SMEs (small and medium-sized enterprises). ENISA generally provides equity loans to companies.

In Spain there are also other entities that provide participative loans, or grant subsidies, with specific criteria and requirements. Among these types of entities and institutions are: Centro para el Desarrollo Tecnológico y la Innovación (CDTI), SEPI Desarrollo Empresarial (SEPIDES), S.A., S.M.E., Red.Es, among others.

Participatory loans are a type of financing with special requirements, such as:

• They can have fixed and variable interest rates. Always linked to a business indicator, i.e. evolution of turnover, profit, EBITDA.
• They are restricted from early redemption. The legislation only allows redemption if it is compensated by a capital increase.
• They are subordinated debt. They have a subordinate rank of enforceability with respect to other debt.
• They are considered as equity, although they are recorded in the appropriate liability account. This is an advantage in the early years of a company’s decline, when losses can leave the equity unbalanced.
• ENISA loans are one of the forms of financing offered by ENISA.

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Participatory Financing and Digital Services: Regulation and ISPs

Spanish and EU regulations on digital services and crowdfunding services complement each other harmoniously.

Business Angels

Business Angels play a crucial role in the startup funding ecosystem in Spain. These individuals are typically successful entrepreneurs, business people, or professionals with expertise in specific sectors, who are willing to invest capital and provide strategic guidance to promising startups in exchange for equity stakes in the company.

Without prejudice to the fact that Business Angels look for a solid entrepreneurial team, a viable business model and a clear target market in their investments, they will also require, in most cases, a partners’ agreement that defines their exit strategy and allows them to obtain a significant return on their investment. It is common for them to want to regulate drag along clauses, preferential liquidations, etc.

• A drag along clause is a contractual provision which, in the event of an offer of shares to some shareholders, obliges the other shareholders to sell their shares as well, under the same conditions and at the same price.
• The preferential settlement clauses regulate (i) the amount of money to be received by the investor in favour of whom the preferential settlement is regulated when a liquidity event occurs, and (ii) the order in which it is to be paid.

In Spain, there are Business Angels networks and associations that facilitate meetings between investors and entrepreneurs, promoting collaboration and the growth of the entrepreneurial ecosystem in the country.

Conclusion

At ILP Abogados, we understand that every startup has unique needs and requires a personalised approach to legal matters. Law is not a commodity and choosing the right legal service can make all the difference to the success of your business.

We offer our experience and dedication to provide you with expert advice on alternative financing and other legal issues relevant to your startup. Contact us today and find out how we can help you achieve your business goals with confidence and security.

At ILP Abogados, we are committed to providing you with the legal support you need to help your startup grow and prosper. Contact us today to start your journey to financial success.

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How to get funding for your startup

For advice applied to your case, see our Startups practice area.

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Related tool, free to use: the startup legal health check.