UK company looking for investment? Check out the options available to you

There comes a time in many startup’s lives when they need to raise money in order to grow. Fortunately, there are a variety of places where they can go to do this. Here Techworld gives a quick overview of the avenues that startups can go down in order to secure everything from a few thousand pounds to tens of millions of pounds.

Startups usually combine sources of funding when they raise money through funding rounds. Initially, they'll raise a seed fund, followed by a Series A fund, Series B fund, and so on.

High-net-worth individuals (HNWIs) and angels

High-net-worth individuals (HNWIs) and angels

Today everyone knows that technology is big business and the multi-millionaires and billionaires of the world are increasingly looking to invest their money in new technology companies. This includes everyone from Christiano Ronaldo and Michael Owen to Bill Gates and Mark Shuttleworth.

In the UK, there has been a surge in the number of successful tech entrepreneurs who have seen their companies bought out by the likes of Google and Facebook; these individuals are now on the hunt for the next high-potential early-stage startup to reinvest their money in.

The amount on offer from high-net-worth individuals ranges from a few thousand pound right up to tens of millions.

Crowdfunding

Crowdfunding

Startups looking to raise money from lots of people simultaneously can pitch their business on the internet through crowdfunding websites like Kickstarter, Crowdcube and IndieGoGo.

This relatively new funding model has seen companies raise everything from a few hundred pound to over £20 million, in the case of the Ubuntu Edge smartphone.

Crowdfunding allows members of the public, high-net-worth individuals and businesses, to back the ideas they either believe in. In return for making a financial pledge they are usually offered a stake in business in line with the size of their contribution.

Most campaigns have a set funding target. If this target is not matched by a pre-determined date then all proceeds are returned to the investors.

Some of the more popular campaigns have been backed by thousands of investors.

Accelerators and incubators

Accelerators and incubators

These are dedicated places where startups can apply to get funding, office space, mentoring and advice.

Generally speaking, there are two types of accelerators: those set up by large enterprises looking to forge partnerships or spot acquisition opportunities, like John Lewis and Barclays, and those set up by organisations who want to piggyback on a startup’s success by taking a chunk of equity in their business, such as Y-Combinator, TechStars and SeedCamp.

On average, these accelerator programmes last for three to six months and offer startups between £5,000 and £20,000.

Venture capital

Venture capital

Venture capitalists (VCs) make investments in technology startups on behalf of other companies.

VCs will typically raise a fund, often hundreds of millions of pounds, before going on to invest it in tech firms in exchange for a chunk of equity.

When a startup is successful, the VC makes money for those that have contributed to its fund, while also cashing in itself by taking a commission.

The funds raised by VCs can be hundreds of millions, meaning that VCs typically put the most money on the table for startups.

Like accelerators, they’ll offer startups mentorship and advice, with many of the VC “partners” hailing from the likes of Google and other technology companies that have experienced rapid growth in the past.

Large organisations

Large organisations

Large organisations have witnessed the success that many of the venture capital firms have experienced investing in fast-growing technology companies and subsequently gone on to set up their own venture capital umbrella companies.

For example, Google has Google Ventures, which recently announced a £58 million fund for European tech startups, while Spanish banking group Santander has a venture capital unit that's investing £58 million in fintech companies.

Government grants

Government grants

There are a range of grants available through the government's innovation agency, Innovate UK, and other government departments, including the Department of Business, Innovation and Skills, the Department of Energy and Climate Change and the Home Office.

These grants are often awarded following competitions whereby startups are asked to convince government officials that their technology has the potential to benefit the UK in some way.

Copyright © 2014 IDG Communications, Inc.