Bristol is an exciting place to be for tech entrepreneurs, having been named the UK’s number one digital technology powerhouse in 2018 by Tech Nation.
It was also reported to have raised more venture capital money than in any other UK city in early 2019 – largely due to Ovo Energy selling a 20% stake to the Mitsubishi Corporation this February, and receiving an investment of around £200 million.
Whether you’re eventually lucky enough to achieve investment on this scale, or you’re just looking for a boost to get your business started, there are plenty of ways to seek finance.
What’s important at this initial stage is to fully understand your options. You should know what kind of investment you need, how much, and exactly what you need it for.
Coming across as unclear on this initial point will look like a warning sign to investors, who want to be confident you know what you’re doing.
We can help you to put together a strategic plan for your business, and to think through the right type of finance for you. In the meantime, here are a few funding options to consider.
Equity finance
With equity finance, you exchange a percentage stake in your company for a financial investment.
You might sell that stake in your business to a private investor – also known as angel investment – or a venture capital firm.
Angel investment is done by high net-worth individuals who tend to support and guide the business, gaining ROI over time.
This kind of investment is a two-way relationship. An investor putting their own money towards your business is likely to want a say in how it’s run, so you may need to think about whether you’re happy to surrender some control.
Assuming your business has high growth potential, it could be an attractive proposition to venture capitalists.
These wealthy individuals or companies contribute their money to a venture capital firm, which invests on their behalf in businesses with long-term growth projections.
Crowdfunding
Using crowdfunding platforms, you can raise finance directly from the public.
In many cases, people who invest through crowdfunding are doing so because they have a personal interest in the product.
This can make it a good way to gauge interest in what you’re doing, as well as getting the investment you need to do it.
In return for their investment, you might offer perks such as early access to your product. This is sometimes known as reward-based crowdfunding.
Alternative options include equity crowdfunding, which means selling investors a stake in your business, or debt-based crowdfunding, in which investors gain interest on a loan they make to your business.
Invoice finance
Waiting for unpaid invoices can cause real cashflow issues for many businesses, especially when you’re just starting out.
Invoice finance is one way of handling that problem and injecting cash into your business.
There are two main types of invoice finance: factoring and discounting.
With invoice factoring, the provider buys your customers’ debt and takes responsibility for collecting it.
They’ll initially pay you for a proportion of the invoice’s value, then pay the rest – minus a fee – when they’ve collected the payment.
Another option is invoice discounting, which works as a loan based on the value of your unpaid invoices.
We can help
We build a strong relationship with all of our clients, whatever stage their business is at, and we work with them to achieve their goals.
That includes determining the kind of finance they need, and where it fits in with their long-term plans.
We’ll also help you create a business plan that will show potential investors where your business is now, and where it’s going in the future.
Contact us to talk about growing your business.
