How do I raise money for my startup?

An angel investor is a private individual who makes a direct investment in a startup, usually in exchange for an equity stake (typically at seed stage).

Traditionally, an angel investor is a high net-wroth individual, and/or someone with industry expertise in the sectors they invest in. (i.e. entrepreneurs, founders, CEOs or investment bankers). 

The SEIS and EIS programs can help offset this investment against an investors personal income taxes in the UK.

An angel syndicate (or angel network) is a group of angel investors who pool their money to invest in startups, usually in exchange for an equity stake. 

Syndicates work in two ways:

• Start-up investment opportunities are sourced and presented to syndicate members, who can opt to invest directly in the start-up as angel investors.
  
  
• The syndicate operates with a formal structure that investments directly into a startup via a pooled fund, contributed by the syndicates members (similar to a VC fund, but usually with far less infrastructure). 

Some syndicates charge fees to startups, typically as a % of total funds raised via their syndicate or network.

Angel syndicates usually invest in pre-seed and seed rounds, though some might invest in later funding rounds.

Crowdfunding companies are digital platforms that enable startups to raise money from a wide network of small investors or supporters via 'crowdfunding campaigns.' These campaigns are typically promoted via social media.  

Some crowdfunding campaigns offer an equity stake in exchange for investment, while others offer rewards or incentives for non-equity investment (i.e. pre-ordering a product). 

Unlike traditional 'angel investors' many investors on crowdfunding platforms are not high net worth individuals and invest much smaller amounts.

Crowdfunding platforms will typically charge a % of total funds raised, as well as upfront or on-going fees. 

Venture capital firms are professionally managed pooled investment funds that invest in startups in exchange for an equity stake in start-ups.

• Investors who have committed capital to the fund are known as limited partners or LPs. Limited partners are usually ultra high net worth individuals or institutional investors (i.e.  an investment bank or pension fund) who can commit significant capital to the fund.
  
  
• Senior professional managers who make investments in startups, on behalf of the fund are known as general partners or GPs.

VC funds usually have established investment criteria (cheque size, industry focus etc). They operate on a high risk / high reward basis. Their primary objective is to deliver the highest possible return for their LPs.

In the UK, VC funds invest in Seed, Series A or later investment opportunities.

Corporate venturing (or corporate venture capital) is funding invested in start-ups by a large company, typically in exchange for an equity stake. The main objective of corporate venturing is typically to drive innovation in their own businesses. 

The investing company might provide the startup with management, marketing or other expertise or services. 

In the UK, corporate venture deals tend to occur at every stage. Many large companies operate accelerators for both internal and external startups.