What is the secret to maximising funding as a UK startup?
2025
8 mins
Are you a budding entrepreneur with an innovative idea? Do you think your invention could transform people’s lives?
Written by: Andrew White
An original idea is the starting point to any startup, but to transform it into a reality which can break into the market, gaining sufficient funding is imperative. There are many options out there, but it can be daunting taking the first step.
In this article, Partner Andrew White presents an overview of the key opportunities for raising finance as a startup and how to increase your chances of securing them.
Funding options for your startup
Investment
The most traditional route to gaining financial support for startups is through investment. Venture capital is institutional funding provided by venture capital firms. It is instigated through different funding rounds from seed to late-stage. In comparison, angel investment is investment from high-net-worth individuals, predominantly for businesses at the seed stage.
Securing investment opens access to large amounts of capital and is a way to corroborate the credibility of your business. However, this is in exchange for equity. Consequently, investors may have high demands, expecting you to achieve certain growth targets and deliver high returns. It is also normal for VC investors to play a role in significant decision-making for the companies they invest in.
For early-stage startups, angel investment is an effective way to acquire funding, as it often means more flexible and faster access to capital. Angel investors can also provide mentorship and valuable networking opportunities. However, the amount of funding will be more limited than from venture capital firms.
Grant funding
There are numerous organisations in the UK which promote innovation and support early-stage businesses by offering grants. This is a way to acquire non-dilutive funding, meaning you don’t have to give up equity or make repayments. However, recipients are limited and the selection process is often highly competitive. Grants are a particularly viable pathway for pioneering enterprises engaged in high impact and research-intensive work. In addition, there are grants which target specific sectors, as well as specific regions.
Innovate UK, a branch of UK Research & Innovation, is an example of a government-led organisation which is dedicated to encouraging the commercialisation of revolutionary technology. They offer several grant pipelines for startups and individuals per year, each in a certain field, in the range of £25,000 to £10 million. Another example is the Advanced Research & Innovation Agency (ARIA) which was established by an Act of Parliament to finance R&D in underdeveloped and complex technical areas in the hope of prompting scientific breakthroughs which will benefit everyone. Their Programme Directors define an opportunity space and allocate £10-100m to a portfolio of projects within that space.
On top of government bodies, there are charities which offer funding and non-financial support to individuals and startups on a smaller scale. For example, UnLtd runs The Funding Future Programmes and The Millennium Awards Trust for new ideas or startups. Plus, the King’s Trust Enterprise Programme has grants of up to £5,000 available for young people with a startup.
Business loans
Business loans are another way to access monetary assistance without sharing ownership of the company. However, an early-stage business must carefully consider whether their idea is financially feasible, as, unlike grants, the money must be paid back later.
There are various schemes in place which help smaller firms with less collateral take out loans. The most significant provider is The British Business Bank which provides extensive assistance to early-stage businesses. Their Growth Guarantee Scheme gives lenders government assurance on 70% of the loan, with loans going up to £2 billion, whilst their Start-Up Loans Scheme offers direct, low-interest loans, from £500 to £25,000, complemented by valuable mentoring to help businesses break into the market. As well as grants, Innovate UK also offers loans to cover the work of innovative businesses, ensuring favourable terms.
Scale-up businesses and high-growth SMEs can also access debt funding by using their intellectual property assets as collateral, known as IP-backed finance. Intangible assets are becoming increasingly important in an expanding ecosystem of high-growth, technology-heavy businesses. Whilst in the past businesses with fewer traditional tangible assets struggled to access debt financing, borrowing for these businesses is becoming more and more possible thanks to their robust IP portfolios.
To leverage your intangible assets for loans, applying for IP protection, such as patents and trade marks, demonstrates clear ownership and that your collateral is secure. You could also consider getting your IP valued to gain a better understanding of its financial potential. Mathys & Squire Consulting can offer valuation services for your business, supported by an evaluation of your business plan, financial projections and market analysis.
Below is a list of useful sites which provide further up-to-date information on current funding opportunities for early-stage businesses.
- British Business Bank
- Innovate UK Innovation Funding Finder
- Local authority websites/regional growth hubs/Local Enterprise Partnerships
- UK Government’s Business Finance Support Finder
[Note: Mathys & Squire are not affiliated in any form with the links above]
Top tips for unlocking finance
Although the options are plentiful, there are limits. Investors are highly selective about the companies they invest in and grants are only offered to a finite number of entrepreneurs. Therefore, you must ensure that your startup or business idea is as promising as possible to attract investment or increase your chances of securing a grant.
Below are some crucial ways to show investors and government organisations that your endeavour is secure and has strong potential for success, even before you have evidence of concrete sales.
Develop a robust business strategy
When applying to grants or pitching to investors, make sure you present a clear business plan, outlining your objectives and how the funding will be utilised effectively. If you are applying for a grant, conduct a thorough investigation of the specific scheme so that you fully understand the requirements and objectives, and can tailor your application accordingly.
Demonstrate market adaptability
Ensure that your business model illustrates your deep understanding of the market, as well as how your invention is viable and aligns with current demand. Furthermore, it is vital to show that your startup will be able to adjust to market changes, particularly in the present economic climate.
Be ready for painstaking due diligence
Your business model, financials and growth projections must be up-to-scratch, as investors will inspect all documents rigorously.
Maximise the potential of your intellectual property
Investors and grant providers will also pay close attention to whether you have an IP strategy in place to protect your innovation(s). Presenting an established intellectual property strategy is an important way to display the capabilities and credibility of your business, especially for companies with lengthy R&D phases, which take a long time to get from idea to final product. Having a robust IP strategy in place will give confidence to investors and third parties, reducing risk and increasing the likelihood of raising investment. See above for more information on how you can leverage your IP directly to gain debt financing.
Utilise investment schemes
Tax relief schemes like EIS and VCT, both of which were extended by 10 years from April 2025, will make your startup more appealing to investors who are hoping for tax-efficient investment options. The Enterprise Investment Scheme (EIS) offers tax relief to individual investors who buy new shares in your company, constituting up to £5 million each year and a maximum of £12 million in the company’s lifetime, though this may be different for knowledge-intensive companies. The Seed Enterprise Investment Scheme (SEIS) is specifically for fully independent companies under 2 years old with fewer than 25 employees. Venture Capital Trusts (VCT), established by the government to boost investment, buy stakes in early-stage companies. Investing in the shares in a VCT is a less risky way for investors to deploy into founders and another way to receive tax relief.
Network
Form and foster relationships with venture capital firms, focusing on those who have experience of investing in startups in your sector. There are also established angel networks in the UK, such as the UKBAA and the Harvard Business School Alumni Angels Association UK which provide opportunities for startups to showcase their goals to investors.
The funding opportunities available can feel overwhelming and it is important to evaluate all the options diligently to pick the right pathway for you, as well as determine what your business is eligible for. However, it is also common for start-ups to use a combination of different forms of funding, especially those which require a significant amount for advanced R&D.
We work with organisations which provide schemes and grants to support innovative new companies, such as Innovate UK etc, as well as investment organisations, such as UKBAA and Harvard Business Angels Association. Keep an eye on our website and follow us on LinkedIn to stay up to date with any opportunities aimed at startups, spinouts and SMEs.