There is a lot to consider before you decide on starting your own venture. Residents living in the UK have to take into account the process for officially registering their business with authorities such as Companies House and Her Majesty’s Revenue and Customs. However, even before you look up company formation UKthereis always the question of required financial resources.
Here are some viable options that you can use to fund your new business or start-up in the UK:
Angel Investors
These are not only wealthy individuals who are known in the industry for their investment-related activities but that are also quite credible and trustworthy. Usually, all you need to do is approach an angel investor in a face-to-face meeting where you can pitch your business idea or even present them with a resolute business plan. Some recognized networks of angel investors in the UK include:
- Angel Academe (£150k-£2 million)
- Cambridge Angels (£50,000 to £1 million/£1 million +)
- Cambridge Capital Group (£50k to £500k)
- Craige Capital (unspecified seed-stage funding)
- The Startup Funding Club (£10k to £150k)
Borrowing From Family or Friends
This is an always available option no matter where you are located. However, you can formulate a legal document that can act as a binding contract. This would help to resolve any legal issues that may arise if things go south. Even though this is quite a reliable option and there are chances that borrowing money from family or friends may not come with interest payments, however, it can also harm your relations if things become unbearable.
Crowdfunding
Crowdfunding is one of the most popular ways to attract funding for your venture in the UK. With crowdfunding, you are simultaneously able to raise funding as well as generate publicity for your business. There are two main types of crowdfunding that may pique your interest, namely:
- Consumer-Focused Funding – a great option for product-based businesses. Platforms like Indiegogo and Kickstarter are prime examples.
- Investor-Focused Funding – where your supporters in return become shareholders of your company. Platforms like Crowdcube and Seedrs are prime examples.
Peer-to-Peer Business Loans
While larger banks despite having the financial resources to fund your venture can turn out to be risk-averse, peer-to-peer loans are a great option. This is because peer-to-peer loans can allow entrepreneurs to receive funds even if your business is new and doesn’t have any substantial performance to show others. Some great examples of peer-to-peer lenders in the UK include the likes of Funding Circle, RateSetter, and Zopa.
Small Business Grants
In the UK if you look around and deep enough you will find several startup-business grants that are available for new entrepreneurs. Some examples include Innovate UK Smart Grants and Kent & Medway Business Funds. Simply visit the Innovate UK homepage and you will find they offer support for startups with commercial potential. Kent and Medway Business Fund on the other hand offer 0% interest loans of up to £500,000.
The UK’s Government Startup Loan Scheme
Established in 2012, this is perhaps one of the best means to acquire reasonable funds for your venture. The Start-Up Loan scheme is backed by the UK’s government and offers you a personal loan of £500 to £25,000. The interest rate is fixed to 6% per annum and you can repay back the loan in 1-5 years of time. You can also visit their website and if you are accepted then you will be paired with a business mentor for 12 months.
Venture Capitalists
Lastly, you have venture capitalists who are interested in funding only high-performance businesses. The British Venture Capital Association provides a directory of venture capital firms operating in the UK that you can further inquire about and ask for more guidance.
I hope this post was able to offer you some meaningful insights as to how you can fund your new business in the UK. Make sure to research all of your options thoroughly before making a decision. Evaluate the pros and cons of each lending source and then make the informed decision that suits you the best. Cheers, and all the best for your future endeavors!