How to fund your business.
Personally, I've tended to bootstrap rather than borrow, but that obviously depends on what it is you are trying to do. Having said that, it's worth having a quick look at the traditional approaches before considering some novel ways of funding that have become available recently.
This is the traditional route. Venture capitalists are only interested in things that are safe bets and they are only interested in investing amounts of money that are too large for the average startup. For proof of concept money you're looking at fools, family and friends to help you get those all important first sales. If you can arrange your terms of trade so that the operation is at least partially self funding so much the better.
Once you have some traction in the market place government or bank finance may have a place. They will want to see a business plan that looks like it might actually work and they will want it to look fairly conventional. VCs are very interested in the people involved - as in - have they got a track record of doing this before. If you are a greenhorn they'll spot you a mile away.
Sometimes you can get business angel money, but these good folk have a tendency to want to take the money out too soon and you may end up merged by default with someone you don't like. Been there.
Grants, crowd funding and subsidised training / consultancy.
For a long time in the UK the only real sources of government money have been for training purposes and subsidised consultancy via programmes such as Growth Accelerator which effectively allow growth companies to get subsidised consultancy and access to 50% of training costs up to a maximum of £2k per head. This is quite a good programme and we have helped a number of clients in this way. More details here.
More recently however funds have started to be channelled to companies that want to grow on a matched funded basis by Local Economic Partnerships (such as Coast to Capital) and County Councils such as West Sussex. These tend to be competitions with the need to appeal as well as to be financially sound. Nevertheless they can provide up to £25k (or more in some cases) for projects.
We have now a lot of experience in advising people about how to present their case effectively. If you would like some help with this please contact us on 0845 094 0407. As always it's about making a strong clear case that's financially appealling, creates jobs and successfully pre-handles objections. In other words IT'S A SALES PITCH.
Finally Crowd Funding. This has been used successfully to raise quite substantial amounts of money. CrowdCube, Bank to the Future and Kickstart all seem to have good track records here.