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Alternative Funding

Types of alternative funding

Angel Investors

Angel Investors finance many different stages of the business journey. Whether you’re just starting out or need a cash injection to help your business grow, Angel Investors could not only provide the finances you need, but they often bring expertise too. As part of their involvement they will normally take a stake in the business and look for a return within 3 – 8 years. They can either be a single investor or part of a syndicate if more funds are required. Angel Investors’ interests tend to be aligned with those of your business which helps when planning for growth.  For more information visit the Angel Investment Network, the UK Business Angels Association or the Angel Hub based at the Engine Shed, Temple Meads, Bristol. 

The Enterprise Investment Scheme

The Enterprise Investment Scheme (EIS) is designed to help smaller, higher-risk businesses raise finance by offering a range of tax reliefs to investors who purchase new shares in the company. You can apply for EIS funding for up to £5million each year to a maximum of £12million in your company’s lifetime.

To qualify your company must have been trading for at least four months, have less than £15million in gross assets and fewer than 250 employees (500 if you meet certain conditions).

Business Growth Fund (BGF)

The Business Growth Fund is there to fund fast-growing UK businesses, unlock their potential and drive their future success. The BGF has up to £2.5bn with which to make long-term equity investments.

Peer 2 Peer Funding

Through Funding Circle, businesses can borrow directly from a wide range of investors, including more than 40,000 people, the UK Government, local councils, a university and a number of financial organisations. They offer unsecured loans between £5k and £500k.

Crowdfunding

Crowdfunding is still a relatively new phenomenon, but has captured the attention of hundreds of thousands of people looking for investment. If you are struggling to finance your business venture, advertise on crowdfunding sites and you may get investors from all over the world pitching in to help. Money invested through most crowdfunding sites does not have to be returned. For more information and a list of crowdfunding sites try the UK Crowdfunding Association.

Equity crowdfunding

As opposed to regular crowdfunding, if you raise funds through equity crowdfunding you will have to give something up, i.e. equity, a stake in your business. One example of an equity crowdfunding platform is Seedrs, which allows people to invest as little as £10 into a business.

Useful links:

Angel Investment Network

UK Business Angels Association

Angel Hub - based at the Engine Shed, Temple Meads, Bristol. 

The Enterprise Investment Scheme

Business Growth Fund 

Funding Circle

UK Crowdfunding Association

Seedrs

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