We thought it might be a good idea to share knowledge of how to raise investment for your business. There are several different ways in which to raise funds and we have listed the main ones below.
The government sets aside a portion of taxpayers’ money each year to put towards business grants and funding new enterprise. If you would like to apply for a grant the best thing to do is keep your eyes peeled! The finance is distributed through local and national organisations, you can check out a full list here: https://www.gov.uk/business-finance-support or a really good local source is: https://www.semlep.com/
This is Brewdog’s sole source of funding, they ask large amounts of people to invest a small amount of money. Brewdog market this in such a way that you feel part of the Equity Punk club and the company’s ethos.
There are three types of crowdfunding: donation crowdfunding is when people donate money to your venture simply because they believe in what you’re doing – they want nothing in return. Equity crowdfunding is when people invest in your company in exchange for shares or a stake in the business. Debt crowdfunding is when people lend you money with the expectancy of receiving their money back with interest. You can research more about crowdfunding here: http://www.ukcfa.org.uk/
Natwest have also recently introduced a crowdfunding scheme called ‘Back Her Business’ which is targeted at women (to close the gender pay gap in business). They will match any funding raised by each individual. You can find more about that scheme here: https://natwestbackherbusiness.co.uk/
Hello Dragons Den… This is when an investor makes use of their personal disposable finance to provide equity finance to a business. In exchange, the investor will normally take shares in the business. An angel investor will normally take an active interest in your business in order to see a strong return on their investment and will support you with their knowledge and experience. Angel investors expect to see a return on their investment within three to eight years. Find out more about angel investments
The UK government is aiming to boost the UK economy by offering loans to aspiring entrepreneurs to get their businesses up and running, through its Start Up Loans scheme. The average loan is £6,000, but you can apply for up to £25,000, and it must be paid back within five years, with an annual interest rate of 6%. Sir Richard Branson is also supporting new businesses with Virgin StartUp – offering loans with an average value of £5,000, to be paid back within three to five years at an interest rate of 6.17%.
Friends and Family
Last but not least, you can always ask your biggest fans – your friend’s and family. We would suggest, if you head down this route to get everything agreed on paper and consult legal advice. If you do enter into a funding relationship with a loved one, treat it exactly the same as you would a business relationship. Keep them updated with progress and your business plan and agree on the terms before accepting or exchanging any money.
We do hope you find this useful. You can always get in touch with us if you are unsure or would like to talk it out with a chartered accountant.