Funding International Growth: Funding sources

When looking for expansion beyond borders, one of the constraints to growth is funding. Typically, expanding into new markets requires setting up a structure to support the new business; at least sales, customer support, delivery, and administration require local resources. Thus, one of the critical parts of international expansion is securing funding for growth.

Different Funding Sources

Cash Flow

Cash flow is the greatest source of funding: It does not bear interest; it does not require you to give up equity in the company and every euro added to the cash flow increases the company value by a multiple. However, cash flows are limited and supporting your growth only with cash flows hinders your growth rate.


Loans are the most common way to finance growth. There is a common understanding that loans are only available for financially sound companies and so loans are not necessarily suitable instruments for growth companies.

However, there are instruments that make loans available also for growth companies. These include e.g. ESIR-loans, which are provided by banks and secured by a guarantee by the European Investment Bank.

Loans can also be obtained from other sources than banks e.g. some family offices. These investors are more able to take into account the specific features of growth companies and provide suitable funding for the case; though typically at higher interest rates.

Public Funding

There are quite a few public entities involved in the funding of growth companies, but for international growth two main players stand out: Finnvera and Business Finland.

For international expansion, Finnvera provides growth companies with internationalization loans and guarantees. They also provide export financing and guarantees. Additionally, without being directly linked to international operations, a Finnvera guarantee can be used to obtain loan financing.

Business Finland also has some instruments aimed specifically for international markets. The tempo grant is available for companies aiming for international growth and Explorer grant can be used for market research. Both of these instruments cover only part of the costs of the project and require sufficient equity funding.


When companies talked about “raising capital” they typically refer to equity funding. Equity funding can be obtained from several sources: early-stage investors such as angel investors, VCs, family offices, through crowdfunding and in later stages from private equity investors and from the public through an IPO.

One of the benefits of equity investors is that since their returns are driven by the growth in the value of the business they invest in, they are incentivized to support the company also in other ways than just funding. This can include e.g. introductions to key market players, customers, cooperation partners, and key employees; mentoring and coaching; assistance with strategy and so on.

When looking for equity investors, check if the investor provides services that benefit you in your growth path. Investors that provide services suitable for your needs are also more likely to have an investment strategy that includes your firm; making the opportunity of obtaining financing from the investor more likely.

Stay tuned for my next blog where I will go through why your company must be ready to scale in order to secure growth funding.

Who’s the Guest Writer?

Reima Linnanvirtais an angel investor and a board professional with a passion on helping startups and growth companies to fulfill their true potential. He acts as a Chairman of the Board of Innovestor and Vice-Chair of the Finnish Business Angels Network (FiBAN).


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Guest blog by Reima Linnanvirta