All businesses need sufficient funding to cover their start-up costs. But if you’re starting a tech or creative business, you may find there are better opportunities to raise the money. We look at the small business grants and funding available for the tech and creative industries, and what you can do to make your funding bid a success.
How much money do you need?
The first step is to know how much money you’ll need. This can be tricky to calculate when you’re first starting up but it is possible.
You may already have these figures from your business plan. If not, you’ll need to calculate your costs, expected income and the point when you’ll start making a profit. For information about how to calculate this, take a look at our article on how to estimate figures for your business plan.
Sources of grants and funding for tech and creative companies
Many tech and creative companies go to market with a “minimum viable product” which allows them to sign up early adopters and begin making sales quickly. However it’s likely that, unless you’re funding your company yourself from savings or other income, you will still need to look for outside funding.
There are a range of options available, but here are some that are particularly suited to tech and creative companies:
This allows you to raise funding from individuals by offering gifts or products in return. You set up a page on a crowdfunding website with your target.
It can work well for tech companies, especially if you are developing a product. The development costs can be prohibitive but crowdfunding allows companies to reach out to buyers before the product is ready. Prospective customers sign up and pledge money to help the business reach its funding goals; in return they receive the product once it has been prototyped and put into production.
This type of funding allows you to not only cover these costs but also to gauge how big the market is and what your customers will want. Success stories include the Pebble smartwatch and the Micro 3D printer.
Although not only for technology and creative companies, angel investors are a great source of funding. According to reports, almost two-thirds of executives in the technology sector say they used angel investors in 2013.
These investors are normally high net-worth individuals who will loan you money in return for a share in your business. Think Dragon’s Den. If you’re looking for this type of funding, try the Angel Investment Network or the UK Business Angels Association.
You can find out more about angel investors in our guide to alternative finance.
Government schemes for tech and creative companies
These options are available to both pre-starts and new businesses and include grants, loans and other investments. The government website lists the schemes available and you can filter your search based on the type of business, the number of employees, the stage of your business and the type of funding you need.
Companies who offer funding specifically for tech companies
There are some companies which offer funding specifically designed to support technology firms or those who innovate. They include:
- Innovate UK: this is a non-departmental public body which offers a range of funding options for businesses who are doing innovative work.
- BrainBox: this company not only offers funding but also mentoring to help you get your company off the ground. It’s specifically aimed at businesses in the technology sector and investors provide funds in return for an equity share of your business.
- Notion Capital: if you’re developing a cloud solution for the B2B market and you’re based in Europe, then this company could be worth checking out.
- Nesta: as an innovation charity, they offer a small number of grants, investments and challenge prizes. Your company will need to bring social benefits.
Companies offering funding for creative businesses
Here are some sources of funding if you’re setting up a creative company:
- Aim Startups: they help creative startups to get going by offering low-interest loans and training to help you get the knowledge you need to make your business a success. They specifically support creative businesses.
- The North West Fund: this investment fund offers finance of between £50,000 to £2m to businesses in the digital and creative sector. In return, you’ll need to provide an equity share in your business.
- The Key Fund: if your business is a limited company, community interest company, LLP or other formally constituted organisation and you have social or environmental aims, then you may be eligible for this funding. The Key Fund offers loans or a mix of loans or grants to creative, digital and other types of businesses.
For more information about funding
If you’d like to know more about these sources of funding, or if you’d like to take the next steps, our free guide to alternative finance can help.