There Are Plenty of Non-Equity Funding Options for U.K. Startups, If You Know Where to Look
Getting funding doesn't have to mean giving up control of your business.
When launching a U.K.-based business many are not aware of the funding available, or how to access it.
We launched our app development startup Sappsuma with a prototype app and ambitions to change the app industry. My co-founder and I had technical and sales experience and the industry was ready to be disrupted. The one thing we didn't have lots of was cash.
We decided early on that we wanted to retain ownership of the company and grow without taking outside investment, at least initially. That didn't mean we had to go it alone entirely, and neither should you if you choose to bootstrap your start up.
What assistance is available?
Startup businesses are often eligible for assistance in the form of grants, mentorship, recruitment, capital equipment, courses and more. For our startup, we took advantage of four types of assistance.
1. Startup Loans: These loans come with an added benefit of mentorship attached. They are designed for early stage businesses that have been trading for less than 12 months. The idea is that the mentorship increases the chances of the businesses success. Previously, these loans were restricted to 18- to 30-year-olds, however due to their success this age limit has now been removed.
2. Regional Growth Funds (RGF): RGF's are typically run by organizations that have been awarded cash, which they can provide as loans or grants to businesses.
3. Government grants: These can have different names depending on your location and many have different application processes. Your location may affect the availability of these grants. For example, you may be more likely to receive a grant if you're starting a business in an area of high unemployment.
4. Tradeshow Access Program (TAP): TAP is a program designed to help businesses exhibit at international trade shows. This program will match your contribution toward trade show costs.
Being a Welsh based business, we took advantage of government grants, staff subsidy costs and payments to exhibit at international trade shows. Within the first year we had secured capital grants to cover 50 percent of our equipment costs, staff wages and 50 percent toward two international trade shows.
This initial assistance allowed us to establish the company, grow and compete with funded companies in our space. With it, we were able to increase sales, support and fuel future growth, all without giving up equity in the company.
Where do you find funding?
The government website is a good place to start. Also, local regional websites will often promote their available support.
Different local authorities provide different assistance to companies within their catchment area. It can vary significantly between areas. As such, a startup business should carefully consider where it will be based. In addition to TAP and a business development grant, our Welsh-based business benefited from Jobs Growth Wales.
In early stage business, finding time to work "on' rather than "in" the company can be difficult. I'd suggest that time spent researching and applying for available funding is time well spent.
For many companies, the assistance available to new businesses may allow them to forego equity funding entirely or delay it until a later stage. If you can prove the business, it mitigates risk for any potential investors and increases the valuation of your company. This is a huge positive if you decide to raise later.
The available funding is changing constantly, and with Brexit looming it may make sense to apply sooner rather than later, as some assistance is currently European funded. My advice would be to make the most of all the resources available. Bootstrapped doesn't mean on your own!