Funding options for startups in the UK

Launching a startup in the UK is an exciting venture, but also a financial challenge. Having a brilliant idea is just the start, but at some point you will need cash to start it. So if you’re looking for funding options for startups in the UK, stick around a little longer and you will know how.

The UK’s entrepreneurial ecosystem is one of the most comprehensive in Europe when it comes to startup funding. From public grants to angel investors, there are a range of options available to suit different stages and profiles of a business.

Self-financing or Bootstrapping

This is the option for entrepreneurs who start with their own savings or by reinvesting the first income generated by their business. It has the great advantage that you do not generate a debt with a third party, and control of the company remains entirely yours.

There are, however, some risks. For example, it can limit the growth of your business by investing your income in it, with the risk that this entails.

Friends, Family & Fools

This is how this type of financing is known, as well as the 3 Fs. To do this, you need to convince your loved ones to decide to support you financially. Even though you are supposed to rely on people in your immediate circle, write everything down. A contract, however basic it may be, can avoid future misunderstandings.

Business Angels

Business angels are individuals with capital and experience who invest in start-ups in exchange for a stake in the business.

In the UK, networks such as the UK Business Angels Association (UKBAA) bring together hundreds of active investors. It has the advantage of providing not only money but also contacts and the possibility of mentoring.

Venture Capital

If you already have a strong team and ambitions to scale quickly, venture capital may be your next step. Venture capitalists (VCs) invest large sums in exchange for equity.

However, don’t forget that VCs are looking for startups with the potential to multiply their investment as much as possible, so not all projects fit this profile.

Subsidies and aids from the British Government

The United Kingdom, as we have already told you previously, offers a wide range of aid to entrepreneurs. This case was not going to be an exception, you only need to meet certain requirements.

Here are some examples of British government aid schemes:

– Innovate UK Grants, for innovative projects related to the fields of science, technology or sustainability.

– Startup Loans Scheme. With the possibility of applying for loans of up to £25,000, low interest rates and without the need for a guarantor.

– British Business Bank, an option that supports start-ups indirectly through funds and programmes.

The processes for accessing these grants are difficult, but if you have a good business proposal and it fits, the help will be well worth it.

Crowdfunding

If your product is attractive to the general public, you can consider equity crowdfunding (investment in exchange for shares) or rewards crowdfunding (pre-sales, token rewards). You can use platforms such as Seedrs, Crowdcube or Kickstarter.

Other funding options for startups in the UK

Don’t rule out accelerators and incubators, programmes that last between 3 and 6 months and culminate in a Demo Day to present your startup to potential investors. Although they don’t always result in a direct cash investment, they offer training, mentoring, workspace and access to investors.

Finally, you can always apply for funding from banks, although there is a tendency to be cautious in the case of startups. And those are our funding options por startups in the UK.