Accelerator funding
Accelerators can offer both equity and non-equity funding, usually alongside a programme of support.
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What is funding?
Funding is the act of providing resources to finance a need, programme, or project. There’s lots of different funding options.
Having enough cash is a key aspect of your business’s financial health. Not having enough working capital can have a serious impact, for example, you might need funding to allow you to complete your business plans.
And because there are so many funding options out there, it’s often hard to know which one is best for your business at the time. If you’ve already watched the videos on our access to funding page then you’ll know a bit more about what’s available. There’s also a quick recap below.
Initial Public Offering (IPO)
Floating your business on the stock market, and making shares available to buy in order to raise money.
Start-up loans/grants
Generally low-interest government-backed personal loans or grants available to individuals looking to start or grow a new business in the UK.
Borrowing
Borrowing from financial providers like banks or loan companies offering a range of borrowing services including:
- Loans – personal or business
- Business credit cards
- Arranged overdrafts
- Commercial mortgages
- Invoice finance
- Asset finance and leasing
Crowdfunding
The use of small amounts of capital from a number of individuals to finance a new business venture, including:
- Equity crowdfunding
- Reward crowdfunding
- Debt crowdfunding
Equity investment
Investment for an equity stake in the business including:
- Angel investment – smaller amounts of investment, usually from an individual, high net worth investor, angel syndicate or local angel network.
- Venture capitalist (VC) – a private equity investor who provides capital to companies that show high growth potential, usually at a later stage.
Funding sources by business lifestage
This diagram shows the different types of funding available. It also gives you an idea which ones could be the most relevant at each stage of your business.
Give yourself time
Looking for and finding funding isn’t easy. It can be a frustrating and time consuming way to grow your business. So, be prepared and do your research.
Think about the options that are:
- most accessible to you
- right for your stage of business
- aligned to the amount you’re looking to secure
- related to the time and resources you’ve got available to secure that funding.
Funding requirements
Now you know about the different types of funding available and how they relate to your business stage, it’s time to think about what you’re looking for.
Ask yourself the following questions to explore the funding stage, needs and requirements for your own business. Once you’ve gone through them, you’ll definitely have a better idea of what you need and how you’re going to get there.
Business state questions:
- What stage is your business currently at?
- Have you validated your business model?
- Is your business generating revenue?
- Do you have financial forecasts in place for your business? (1-3 years)
Funding questions:
- Have you identified a funding gap?
- When would you need the additional funds by?
- Are you clear on how much funding is required?
- What is the funding for?
- Have you identified a funding source?
- What are the next steps to securing that funding?
Funding checklist
Can you put a mental tick ✓ or a cross ✗ next to the items on this list for what you’ve already got? For anything you haven’t done, jot down a reminder or save a voicenote as your funding to-do list.
Business Model Canvas
Build out the nine components of your business to model growth plans.
Business plan
Outline your forecast and growth plans, plus the opportunity on offer to help investors see you're worth their time.
Due diligence
Do the groundwork now on your finances and when you’ve found a funder and secured an investment, it'll speed things up.
Financial projections
Keeping your plans up to date can help you determine if you can move forward.
Funder details
Don’t underestimate the time it takes to research, contact and cultivate potential funders.
One page summary
Jot down exactly what you need to introduce yourself and your business to potential funders.
Pitch/pitch deck
Develop a pitch or deck for your business, including why you need funding is a great idea.
Valuation
Important especially if you’re going for investment, outline the equity and return on investment that’s on offer.
Funding one pager
There are 10 key elements to get down for your funding one-pager, which are similar to the 60-second pitch idea that you might have already looked at. If you haven’t had a chance, don’t worry, there’s everything you need to know in the 60-second pitch article.
In the meantime, carry on thinking of your answers to each of these sections. Pull your thoughts together using these headings and you’ll have the basis of your funding one pager.
1. Business model
What’s different about yours? How do you distribute, who are your key partners, how do you make money?
2. Business summary and vision
A brief intro to your business and your overall vision for the long term.
3. Competitive advantage
What’s yours? What’s the innovation that makes you stand out?
4. Contact details
Don’t forget to include them!
5. Customer problem and your solution
Introduce the problem or painpoint. Explain how your solution addresses the painpoint for the customer.
6. Financial summary table
What are your projections for the next 3-5 years in terms of turnover, gross and net profit?
7. Management team
Who’s in your team – and what’s their experience? Do you have mentors, non-exec directors or advisors?
8. Target market
What’s your knowledge of it? Do you know the total addressable market and the size of the opportunity?
9. Traction
What have you done to date? What’s your proof of concept, and where are you with customers, sales and investment?
10. Your ask (mentor/funding)
What’s the amount of investment you’re looking for, and what will you use it for? What’s your exit strategy and the ROI?
Tips for getting funding ready
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1
Securing funding can be tough, so plan ahead if you can
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2
Explore all the options available to you
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3
Speak to peers, your bank manager and investors
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4
Be realistic about how much you need and why
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5
Pitch often and be resilient to knock-backs
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6
Create clear and concise documentation that stands out from the crowd
What's next?
It’s important to remember that most businesses go through the processes of looking for funding. So no matter how hard it seems at the time you’re not on your own, and there’s lots of support available.
You could:
- Build out a funding one pager for your business, identifying areas that need further exploration
- Run through the learning on the basics of bookkeeping or financial management to help you develop solid financial statements and put forecasts together
- Sign up to one of our wrap around events to help you explore your funding needs further
For more insights on funding and managing your business finances check out this article Understanding your finances.
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