So, you’re a startup founder and you’ve got a brilliant idea for a business. Your idea, should it come to fruition, is going to disrupt industry or change the world (as the folks in Silicon Valley like to say). You know that turning this idea into a successful company and product requires hard work, a little luck, and of course…money! The question is; how do you get startup funding?

 

Types of Startup Funding

 

Grant Funding

Grants are often the first place people look for funding, after all, what’s better than free money from the Government? The U.K. offers a range of grants and funding opportunities that can help you start your business or continue to grow it. The number of grants and their eligibility criteria is far too long to list here, so put together a quality business plan, get onto Google, do some research and start applying.

 

R&D Tax Relief

If your company is developing a new product, chances are that you’ll be doing some R&D work. Whether it’s software, robotics, AI, engineering or a host of other businesses, you may be eligible to claim a rebate from HMRC in the form of R&D tax relief. R&D tax incentives allow businesses to deduct eligible R&D expenditures and up to 33p for every £1 spent. In layman’s terms, the government will give you a refund on money you’ve spent on R&D, should it meet their criteria.

Businesses also have the opportunity to access their expected refund in advance as a loan through Fundsquire. We will finance both accrued and filed R&D, giving you access to vital cash flow up to 9 months before you receive the R&D refund. See how our client KFSU made use of Advance Funding to speed up development and further increase R&D spending.

 

Friends, Families & Fools

Consider starting with your friends and family – they know you, trust you, and believe in you. This could be a great source of funding if you’re a founder with no prior track record in business or in your industry, or are an upstarter with ambition. Many successful businesses have been started with a loan (or gift) from a relative, and it’s a useful place to get your first capital injection.

 

Crowdfunding

Platforms like Kickstarter and IndyGoGo offer startups a unique opportunity to sell their idea or future product to a legion of active consumers. For businesses engaged in B2C, crowdfunding offers a real opportunity to get your product in front of millions of potentially interested people. With a slick video and some creative marketing, you might be able to join the likes of Kickstarter’s most successful campaigns.

 

Investor Funding & Equity Financing

While this may seem counter-intuitive, most Venture Capitalist (VC’s) are not interested in investing in just an idea. Instead, they want to fund companies that have turned ideas into a product, and require funding to scale up.

This type of funding is not for everyone. VC’s generally require an equity stake, thus diluting the ownership of founders, something that may not be palatable for those that have invested years of blood, sweat and tears into their company.

Related Article: Reasons to Avoid VC Funding

 

Self Funding

Of course, there’s always self funding. Who better to finance your idea than the person who believes in it the most, you! Using personal savings is a good way to start your business, however be wary of taking debt against personal assets (e.g. a second mortgage) or piling business expenses onto a credit card.

 

Conclusion

As you can see, there are plenty of ways to get startup funding. Each method has its pros and cons, and founders should be aware of these before making this important decision.

If you’re carrying out research and development in the U.K., consider making an R&D refund claim. If you’re unsure if your business qualifies, reach out to Fundsquire and we’ll be happy to point you in the right direction.