Start-up funding UK: How to secure the money to grow

September 2019

Over 99% of all businesses in the UK are SMEs. And lots of them are fighting for funding to take their next steps. Here’s our guide on where to get it.

Things are looking sunny in the world of UK investment. The first half of 2019 has seen more start-up funding than in any equivalent period before. It’s a big boost after 2018 saw total investment in UK start-ups drop by 15%.

This news will be cheering for companies in need of a cash injection. There is money to be had. Investor appetite is strong with £4.5bn already invested this year. The question is, how do you find the right backing for your venture? Well here are your main options:


SME grants

Getting a grant is a steal because you don’t have to pay the money back. That does mean they can be more difficult to secure, though. Generally, grants are available for businesses that will make a positive impact to society and the environment.

Research and development start-ups, for example, could apply for R&D Tax Credits, Innovative UK Smart Grants and Innovative Medicines Initiative funding. There are also grants out there for businesses working to restore buildings. These grants are just some types of sponsoring funded by the European Regional Development Fund (ERDF).

The National Lottery is also big for UK start-up funding. They cover everything from sport to the arts and community support projects. Districts across the UK also offer their own grants to help local start-ups. There are loads of these and you may benefit from lower competition.



Crowdfunding is becoming one of the go-to ways to finance a new business. A couple of years ago, over £200m was invested through crowdfunding. Monzo, Revolut and BrewDog all have this form of business finance to thank for their success.

It works by pitching your idea on a website so people and organisations can invest in you. That means you need to put forward a likeable and engaging case, so getting some PR and marketing advice is key. Here are a few of the crowdfunding sites we’ve heard good things about:

Crowdcube – Promising to ‘fund the wonderful’, Crowdcube helps determined, innovative businesses get investment in return for equity in their business.

Seedrs – Helping businesses at seed-stage, this crowdfunding site is ideal if you’re just starting out.

Crowdfunder – This site may be a good option for you if you’re starting a charitable project or community / sustainability led business.

Kickstarter – Funding everything from tech innovation to arts projects, Kickstarter helps creative start-ups get underway.

Syndicate Room – This site has a very thorough selection process for its start-ups. It can be difficult to get showcased but it attracts serious investors.

If you go down the crowdfunding route, make sure you get your idea patented because you’ll have to publicise it.


Government start-up loan scheme

This scheme offers great start-up loans with minimal risk. Your business assets aren’t used as security and you don’t have to pay application or early repayment fees. You could get anything between £500 to £25,000, in return for a fixed interest rate of 6%. Most businesses get around £7,000.

On the downside, you might not receive the amount you really need. You only have five years to pay back the money and there is no security, so the scheme is unlikely to pay out large sums. It’s only available for businesses that have been trading for less than two years.

When you start your application, you’ll be matched to a Delivery Partner to support you through the process. This insight on business plans, cash flow forecasts and personal survival budgets can be invaluable for people new to the world of business.


Peer-to-peer business loans

Peer-to-peer lending is a way to dodge the banks and, instead, get a loan from people or organisations. Funding Circle is a good example. By cutting out the banks, business finance becomes more immediate and investors can enjoy attractive returns.

It’s backed by the Government-owned British Business Bank. Put simply, investors open an account with Funding Circle and lend funds to different businesses in return for monthly repayments plus interest.

A good reason to choose peer-to-peer lending is speed. When you apply for these business loans, you’ll often find out within a day or so whether you have been accepted. The downside is that it’s a loan, so you’ll have to pay interest and repay the money. But you won’t have to offer up a stake in your business with this option.


Angel investors and venture capital

If you are looking for more than just money, an angel investor could be a great option. These experienced entrepreneurs can advise you on how to grow your start-up. Various websites, like Angel Investment Network, can connect you to investors. This form of business finance is attractive, especially for new business owners.

The challenge is finding someone who will provide helpful input, rather than interfere. They’ll also have a stake in your business, so you’ll have to sacrifice some of your profit. Some people prefer to enlist the help of a business adviser instead.

Attending network events can be a good way to find angel investors and get to know more about them. If you find the right person, you could both enjoy great success.


Venture capital

For businesses further along and in need of large sums of money, venture capital can plug the big gaps. It’s offered by organisations that manage pools of money, rather than individuals. The amount you get can be upwards of £1m. Like angel investors, venture capital providers will want some input in your business. They may ask for a seat on the board, so you will be limited by their opinion in some ways. However, they can provide excellent insights.


The Fora difference

Many of our Residents have plenty of experience in raising business finance. Why not stop by one of our upcoming events to find out more from those with real, personal insight.