The document discusses sources of finance for businesses at different stages of growth. It outlines the key characteristics of different types of funding including "Four Fs" (friends and family), grants, debt, and equity. For each type of funding, it provides details on typical funding amounts, requirements, success rates, and examples of providers. The overall document serves as an overview to help businesses understand their funding options as they progress from early stage to later stage growth.

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UWSP Access to Finance
Tim Powell
Tim.powell@uwsp.co.uk

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Warwickshire Rural Growth Network
Project
• Pilot Project The Rural Economy Grant – Micro
Enterprise Support is part of the Warwickshire
Rural Growth Network (RGN).
• Rural high growth/ high value micro-
enterprises in the LEP priority sectors:
manufacturing/ advanced engineering, digital
media, and low carbon technologies.
• Overview of Interactions with 100 businesses

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100 Interactions - Business Type

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Type of Funding Sourced

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Sources of Funding Used

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Sources of Finance
Concept/ Seed
/Micro Existing
Start-ups/Existing
Early Stage/Growing Later Stage/Mature
£0k
£50k
£100k
£500k
£1m
£2m
£5m
£10m
£100m
Publically
Backed Venture
Capital
Private Venture
Capital
Novel Debt
(CDFIs)
Banks
Business Angels, Alternative Crowd
Funding
Gov’t & Public backed Venture
Capital/ LEP Initiatives/ERDF schemes
& TSB & other grants
CDFIs
Bank
Public
Equity
MarketsPrivate
Venture
Capital
Banks
4F
TSB/ other
Grants.
Alternative
Crowd
Funding
Angels
The SME Funding Escalator
Sources of
Capital
HIGH
RISK
LOW
RISK
Idea
Generation Product Development Commercialisation Expansion

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Four ‘Fs’
• Founders, Friends, Family and Fools;
• Relatively ‘cheap’ money (soft
loans, gifts, cheap and unstructured
equity sales);
• Usually quite limited (how big is your
credit card limit?);
• Often uncritical – reinforces your own
ideas without challenging them;
• To raise it, you often just need an idea and
an outline business plan.
• Usually done without any agreement on
what happens in the future and that can
be a problem later

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Grants
• Grants usually provided by government, EU and public bodies;
• Range from £500>£5m+;
• Often require a contribution and or match funding;
• Funding is often used to drive specific policy agenda (e.g. defence
technologies, nuclear technologies, young entrepreneurs);
• Clear limits on what you can spend money on;
• Often require fairly detailed applications and a business plan;
• Grant schemes tend to be very competitive (in UK 10%>20% success rate
is typical);
• Sources: Technology Strategy Board, local council, Local Enterprise
Partnerships, Universities
• There are many different grant schemes – and they change regularly

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Debt
• The lending of money, often secured against an asset, with a fixed repayment
schedule;
• Usually only available to firms with a strong track record and/or valuable assets
(very rarely IP);
• Often requires personal guarantees from directors (e.g. charges over their homes);
• CDFIs ( CWRT), asset
finance, factoring; Crowd Funding
(THIN Cats )
• Can have inflexible payment
schedules with fixed interest but no
equity ownership dilution issues
• Banks – have a number of different
options and all debt can be quite
quick to obtain
• Local Councils –administer a lot of
schemes for their area

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Equity
• Stranger or External Equity is suitable to very few businesses
• Three main types of investor; Business Angels (private individuals- Networks and
Crowd Funding) ; Venture Capital Funds (investment firms); and Corporate Venturers
and some public backed funds.
• All invest in high-risk businesses but usually BAs at the risky start-up stage, VCs once
the tech/model is proven and CVs once the market is proven;
• Investments of £25k>£10m+;
• Very competitive market (fewer than 20% of firms who approach Minerva get in
front of investors, fewer than 10% raise money);
• Requires very detailed business plan and probably many meetings/presentations;
• Equity investors want a capital
exit and need to be convinced
that a business can deliver
them high multiple of their
initial investment;
• Sources: UKBAA/BVCA/