What are alternatives to crowdfunding in the UK?
What are alternatives to crowdfunding?
There are a range of alternative funding sources for start-ups and businesses in the UK other than crowdfunding. (If you are seeking funding, make sure you start with a high quality pitch deck).
Here are a few examples:
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Angel investors and angel investor syndicates:
Angel investors are high net worth individuals who provide capital to early-stage companies in exchange for equity. Angel investors typically invest in companies that they have a personal interest in or a connection to. Angel Investor syndicates are groups of angel investors who pool their money together to make larger investments.
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Venture capital funds:
Venture capital firms provide funding to startups and early-stage companies in exchange for equity. Unlike angel investors, venture capitalists are professional investors who manage a fund and invest on behalf of their limited partners. Notable venture capital firms in the UK include Octopus Ventures and LocalGlobe. They expect to be able to achieve a significant return, typically over 3-7 years, which means they favour technology companies who can deliver exponential scale in large markets.
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Banks:
Banks and other financial institutions offer loans to businesses of all sizes. These loans can be secured against assets or unsecured and may have different interest rate and term. In the UK, well-known examples of banks that provide business loans include Barclays and Santander.
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Government grants:
The UK government offers a range of grants to businesses, particularly those in the technology or innovation sectors. These grants can help cover the costs of research and development, or help with the expansion of a business. UK Research & Innovation (Formerly Innovate UK) and European Regional Development Fund are some of the government-funded programs that provide grants to businesses.
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Peer-to-peer lending:
Peer-to-peer lending platforms match borrowers with individual investors who provide the funding. This allows borrowers to bypass traditional banks and get funding directly from investors. Zopa and Funding Circle are examples of UK-based peer-to-peer lending platforms.
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Business incubators and accelerators:
Incubators and accelerators provide mentorship, office space, and other resources to help startups get off the ground. They may also provide funding to the startups in their program. Notable examples in the UK include Techstars.