There’s plenty of support for startups and growing SMEs seeking financial backing outside of the banks
Banks seem to be closing their doors to startup businesses, but that shouldn’t deter entrepreneurs from seeking funding. In fact, there are more funding options open to startups than ever before as new services have emerged to fill the gap.
Emily Brooke, founder and chief executive of Blaze, has tried several different sources of funding for her business which provides innovative products for urban cyclists.
Early on she used Seedrs, an equity-based crowdfunding platform, and Kickstarter, where she achieved her target of £25,000 in just a few days. She chose the crowdfunding route for three reasons: “Firstly, proof of concept and the ability to validate the idea before speaking to distributors, retailers and manufacturers; secondly, to get feedback from early adopters; thirdly, to increase awareness,” Brooke says.
She has also used business angels (individuals of high net worth) which she found to be a fairly easy process, as well as venture capitalists (“much more complicated”). Angels provided individual support, though they lacked the “deep pockets” she might have needed down the line. Venture capital was process-intensive and a big decision to take on, but provided “incredibly valuable learning and validation of the business”.
Boundaries between the different funding routes are blurring as crowdfunding becomes mainstream and more traditional funding providers embrace the channel. Angels Den in Scotland, which runs “speed funding” events (where startups can pitch in three-minute bursts to up to 30 investors in one day), now also provides online crowdfunding supported by its angel network.
Meanwhile a newly launched crowdfunding platform, kriticalmass, lets projects court sponsorship and endorsement from major brands and celebrities, in addition to generating funds and sourcing volunteers.
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