Five financing models that really work

There is a famous saying: “The bigger the sum, the clearer the agreements should be.” This aptly explains why so many business partnerships end in failure.

Choosing between an investor and a business partner is not just about money, but about the interaction model, expectations, and detailed division of responsibilities.

As the head of the international corporate law and fintech practice at Prikhodko & Partners, I have seen dozens of successful and failed cases where great business ideas disappeared simply due to the wrong choice of funding source or the lack of clear agreements.

Investor or partner: what's the difference?

An investor invests money with the expectation of getting more money. He is betting on your ability to generate profits and grow capital.

A business partner is different. Yes, they may also invest money, but they also bring expertise, business connections, market access, or intellectual property. A partner is often involved in day-to-day operations, participates in strategic planning, and shares responsibility for results with you.

According to our statistics at "Prikhodko and Partners", about 65% of small and medium-sized businesses in Ukraine that have attracted only a financial investor, rather than a partner with competencies, face scaling problems after 3 years.

In contrast, in partnership models, this figure is less than 30%.

When your business needs external resources

Not every project needs money. Often, competences are more important.

• Are you planning to scale? Calculate direct costs: personnel, marketing, operational setup, legal and accounting support. Build a 1–2-year financial plan (P&L). In this case, an investor is most often needed.
• Lack of expertise, market access or technology? Money alone won't help here. It's better to look for a partner who will bring these assets to the business.

Five proven financing models

In practice, there are several working mechanisms for raising capital.

At Prikhodko and Partners, we often help clients structure these models:

1. Classic investments
   Money in exchange for a share of profits or capital. High risk, but potentially high returns. Suitable for fast-growing markets.
2. Credit
   Interest-bearing loan with clear repayment terms. Predictable, but does not give the investor control over the business. Ideal for companies with stable cash flow.
3. Investment loan
   Hybrid model: higher interest rates than a classic loan, but with certain guarantees for the lender. Popular in the manufacturing sector.
4. Equity participation
   The partner receives a share in the company, participates in decision-making, but has no guarantee of stable dividends.
5. Venture capital
   Financing startups with the potential for exponential growth. Here, it's either multiple profits or a complete loss of investment. Only 1 in 10 venture projects becomes a "unicorn" (according to CB Insights).

Where to start:

In the early stages Entrepreneurs often raise funds from friends, family, and those who are willing to take a risk on trust. But even in this case, we recommend recording the agreements in writing to avoid misunderstandings.

In parallel, test the idea: for example, through "cold" messages on LinkedIn to potential investors in your industry. Only a fraction will respond, but even a rejection with comments is valuable feedback.

Why reporting is an asset, not a bureaucracy

Most entrepreneurs consider monthly reports to investors a formality. In fact, they are a trust-building tool.

Experience shows that investors who receive regular and transparent information are more likely to reinvest in your next projects. This is a long-term relationship, not a one-time deal.

The secret to a successful partnership

The biggest risk of a partnership is a difference in values and goals.

Before starting cooperation, it is important to discuss:

• Why does everyone want to develop this business?
• Is there a plan to sell the company in the future?
• How are roles and profits distributed?
• What are the ways out of crisis situations?

The lack of clear answers often leads to conflicts, even if the financial part looked perfect.

Legal registration is mandatory

Regardless of the chosen financing model, it is necessary document the agreements.

These can be:

• Shareholders Agreement — an agreement between the co-owners of the company.
• Investment Agreement — agreement on investment conditions.
• Loan Agreement — a credit agreement with a clear payment schedule.

We develop such documents individually, taking into account jurisdiction, tax implications, and corporate risks.

Conclusion

Investors bet on your success, partners work for it. An investor wants a share of the profits, a partner shares decisions, responsibilities, and even failures with you.

The right financing model can be a catalyst for business development, while the wrong one can be the reason for its closure. The main thing is to understand what exactly your project needs and to formalize cooperation in a way that is profitable and safe for all parties.

If you need help structuring a deal with an investor or business partner, the Prikhodko & Partners team is ready to support the process from the first meeting to signing documents and protecting your interests.