Raising capital is one of the biggest challenges London startups face. Funding will get your startup off the ground, then get it from point A to point B and ultimately shape the trajectory of your business. From convincing family members for an initial loan to negotiating a term sheet with an investor, there are multiple financing options, but choosing the right one will depend on many factors.
What stage your startup is at, what funding method makes the most sense for your business models, current economic trends, location and a host of other variables.
According to Crunchbase data for 2019 the UK took first place in terms of fundraising deal volume, with 1,425 deals totalling $14.31 billion, representing 40% of all European funding for the year. Among those 1,425 deals, the largest venture funding round went to London’s OneWeb, which raised $1.25 billion in March 2019 in a round led by Softbank. Availability for funding in London is one of the best, and that is why the favourite place for founders to start their company is also London, as stated in Startup Heatmap Europe’s report for 2019.
From London to the rest of the world, here are 8 startup fundraising methods used at different stages of a startup’s life to turn the idea into reality.
Engage the earliest founders: The three Fs - Friends, Family and Fools
You have an idea, possibly a working prototype and the business is in its nascent phase and you need initial capital to get things moving. The three Fs may be a good source of early capital and it is the most popular route for very early-stage startups. The inner circle is often the best safe test market, however, be aware of the risk of bringing the issues of money into any personal relationship.
Dip into your personal savings
Believe it or not, many of today’s biggest companies like Airbnb, Apple and Facebook came from humble origins of being financed primarily by their own founders. In the end, if you don’t trust in yourself, who would? Investors will definitely see it as a good sign.
Working with an angel investor
Angels are called angels for good reason. The wealthy, business-savvy individuals are great assets not just because of the cash they bring along, but because they also have the expertise, connections and can open doors. The UK Angel Investment Network would be a good place to start.
Startup Pitch Competitions in London
Pitching competitions enable startups to showcase their business and gain early exposure and attention from entrepreneurs, investors, business leaders and the media. Over the years, competitions have become so popular that even the Mayor of London has introduced one, looking for smart business ideas to make London cleaner and greener. If cleantech is not really your deal, check out Rising Stars 2.0, the UK’s most exciting competition for innovative, early-stage tech companies, designed to take your business to the next level.
Accelerators Programs in London
An accelerator can play a key element in a startup’s journey. Acceleration programs are based on focused, time-windowed curriculum where startups receive mentorship, education, and networking resources. Some offer funding as well, while others do not. The capital may not come in seven digits, but the mentorship and support can be a real game changer. For startups in London seeking a structured approach to rapid growth, here are a few London accelerators that may be a good fit: Techstars, Seedcamp, Wayra, Founders Factory, and Collider.
You have a well-formed product concept and a plan for bringing it to market, and you need additional capital to move from this early conceptual phase towards a product.
