Startup Funding: UK in 2024 & 7 Ways to Find Funding

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Why the UK is a Great Place for Your Startup

Looking for startup funding UK? Then chances are that the thought of a startup company concocts images of modern offices in summery Silicon Valley and not the dynamic and drizzly landscape of the UK. However, maybe it should…

Startup Funding UK

‍The UK is a superb place for business. Firstly, the country even topped the Forbes’ ‘Top Countries for Business’ list in 2018. Secondly, with over 5,377 startups, the UK is a particularly glowing hub in the startup industry. The UK has the third highest startup effort rate in the world (via firstsiteguide.com). There’s no lack of funds to support these businesses either: so far in 2021 UK startups have raised a total of €17.2 billion from Venture Capital funds. This is a new record for the country, which raised over €14 billion in 2020 (via sifted.eu).

The tech scene in the startup industry is thriving, too. Around £4 billion of the €14 billion was invested in UK tech startups within the first six months of 2021. This is despite the economic damage caused by the ongoing Coronavirus pandemic (via growth businesses.co.uk).

2024 Startup Funding: UK Landscape

The UK remains one of the most attractive destinations for startups in 2024, with its thriving ecosystem, robust funding opportunities, and strategic global position. As of the latest reports, the UK continues to lead Europe in venture capital investment, with over £15 billion raised by startups in 2023 alone, a 12% increase from the previous year. This upward trend highlights the UK’s resilience and adaptability in the face of global economic shifts.

  • Venture Capital Investment: “In 2023, UK startups secured £15 billion in venture capital funding, marking a 12% year-over-year growth.”
  • Startup Survival Rates: “The UK boasts a 5-year startup survival rate of 42%, one of the highest in Europe.”
  • Emerging Sectors: “Notable growth has been observed in sectors like fintech, health tech, and greentech, driven by both public and private investment.

Here’s what VCs are saying:

  1. David S. Rose, Angel Investor and Founder of Gust: “The UK continues to be a magnet for startups, thanks to its robust financial infrastructure and a government that’s deeply committed to innovation. The post-Brexit landscape has opened new doors for international entrepreneurs who are looking to tap into a market that’s both mature and flexible.”
  2. Reshma Sohoni, Co-Founder and Managing Partner at Seedcamp: “The UK’s startup ecosystem has evolved dramatically in recent years, particularly in fintech and healthtech. With the right support and funding, the UK remains one of the best places in the world to launch and scale a startup.”
  3. Eileen Burbidge, Partner at Passion Capital: “Startups that can navigate the UK’s regulatory landscape and leverage the country’s vast talent pool will find themselves in a position to succeed. The UK offers a unique blend of tradition and innovation that’s hard to find elsewhere.”
  4. Saul Klein, Partner at LocalGlobe: “London’s diversity and access to international markets make it a prime location for startups. The city’s ecosystem is well-suited for companies that are looking to scale globally, especially in tech and creative industries.”

Startup Funding UK: Why is the UK a Thriving Hub for Startups?

‍Major events such as Brexit give the impression the UK is no desirable place to found a startup. However, there are many reasons why the UK is a great country for your startup to call home. Here are our top three reasons:

Startup Funding UK

London!

‍Our capital city was voted by 200 top US tech executives as the best city in Europe for tech startups (via cityam.com). It’s home to a vast array of current and future industry experts and is widely considered to be one of the banking capitals of the world. It’s also hugely international and boasts an expansive community of startup founders and funding investors such as seed capital investors, VCs, and even Angels (more on that later).

The UK is home to several thriving tech and innovation hubs, each offering unique advantages for startups. From the financial heart of London to the biotech breakthroughs in Cambridge, these hubs are at the forefront of global innovation.”

  • London: As Europe’s leading financial centre, London continues to be the top choice for fintech startups. With access to a wealth of capital, a deep talent pool, and a supportive regulatory environment, London offers unparalleled opportunities for startups looking to scale quickly.
  • Cambridge: Renowned for its world-class research institutions, Cambridge is a hotspot for biotech and medtech startups. The city’s strong connections with academia and its focus on cutting-edge research make it an ideal location for companies in the life sciences sector.
  • Manchester: Manchester has emerged as a leading hub for digital and creative industries. The city’s affordable cost of living, combined with significant investment in digital infrastructure, makes it an attractive option for startups.
  • Edinburgh: Edinburgh is gaining recognition for its vibrant fintech and AI ecosystems. The Scottish government’s support for innovation, coupled with a strong university presence, provides a fertile ground for startups.
Startup Funding UK

‍Startup costs and time

‍The cost of founding a startup can be extortionate, but here in the UK the average startup budgets only £5000 to launch (via tide.co). This makes it the fourth cheapest country in the world to launch a business, just behind Ukraine (via rovva.com). In the UK it takes less than an hour to launch a business using the government portal. It only costs £12, too!

Startup Funding UK

Government Support

‍Another influential reason why the UK is a thriving hub for startups is the government initiatives that both encourage and make it easier for investors to finance capital in startup companies. Schemes such as the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are great examples of inciting Venture Capitalists to invest in UK-based startups. You can read more about them in some of our previous blogs.

Sustainability and Green Initiatives

The UK’s Commitment to a Green Economy: As global attention shifts towards sustainability, the UK has positioned itself as a leader in the green economy. The government has introduced numerous initiatives to support startups that focus on environmental sustainability, including grants, tax incentives, and funding for green innovation.

  • Government Support: Startups in the UK can take advantage of the Green Homes Grant, Clean Growth Fund, and other incentives designed to promote sustainable business practices.
  • Case Studies:
    • Octopus Energy: A UK-based startup that has revolutionized the energy sector by providing renewable energy solutions. Octopus Energy’s success is a testament to the UK’s supportive environment for green startups.
    • Bulb: Another standout in the green energy sector, Bulb has rapidly grown by offering affordable, renewable energy, further illustrating the opportunities available in the UK’s green economy.

Where in the UK is Best for my Startup?

Startup Funding UK

So, the UK startup scene is vibrant and booming, but where in the UK is best for your startup?

There’s no doubt that London is the heart of the UK startup industry. According to beauhurst.com, is currently home to around 263 (80%) of all UK-based VC investment funds. Around 15 VC funds are based in the north-west of England and only 2 are present in Northern Ireland. Scotland is home to 13 VC funds, whereas Wales has no traditional VC funds (as of 2019). However, it is possible to find funding from the Development Bank of Wales, which is dedicated to investing in Welsh businesses.

Startup Funding UK

‍However, it is worth noting that the geographical location of your startup company could influence the source of your funding. Whilst 70% of all deals made by UK-based VCs involve investing in UK-based startup companies, a surprising 57% of those deals invest in businesses that are also based in London.

Further to this, Northern Irish VC funds have only announced deals with North Ireland-based businesses (via beauhurst.com). This shows that investors for startups are highly likely to look to secure deals with startups within their close proximity and could mean you should think carefully about where in the UK to start your business.

7 Ways to get Startup Funding in the UK

‍Funding a startup can be a difficult process regardless of the country it’s located in. There are, however, several ways in the UK to gain funding to grow your startup into a successful business. Here are our top seven ways to score startup funding in the UK.

 

Startup Funding UK
Seek regional funding from local boroughs

Regional funding from local boroughs

In the UK it is often possible for small businesses to find regional-based funding from their borough’s local government. This funding, which can be in either business loan or government grant form, intends to grow local businesses and stimulate the local economy. For example, between £1,500 and £10,000 with a maximum intervention rate of 30% is available for businesses in Derbyshire and Nottinghamshire thanks to the D2N2 Capital Growth Fund.

 

Startup Funding UK
Seek funding from the UK government’s startup loan scheme

The UK government’s Startup Loan scheme

‍The Startup Loan scheme is a government initiative that was launched in 2021 with the aim of invigorating entrepreneurship in the UK. It comprises a personal loan of between £500 and £25,000 and has a fixed interest rate of 6% per annum. It can be repaid over one to five years. To qualify for this loan, startup founders must submit a detailed business plan and a cash-flow forecast. This is to prove that the startup can afford the agreed monthly repayments. Startups successful at securing this loan will also be paired with a business mentor for the first 12 months of the agreement.

 

Startup Funding UK
Seek funding from the UK’s Innovation Grant

Innovation Grant

‍Although innovation grants are highly competitive, these funding sources aim to stimulate growth in tech startups. Funding with the Innovation Grant can help to turn an innovative tech-based business idea into a successful business venture. As well as money, startups that receive the Innovation Grant will be well-regarded in the eyes of VCs and Angels, who often highly appreciate this external stamp of approval.

 

Startup Funding UK
Crowdfunding to fund startups

Crowdfunding

‍If you don’t ask, you don’t get it, and sometimes asking outright is the best way to go. Online crowdfunding is not just a great way to raise capital to invest in businesses at the earliest stages, but also a perfect opportunity to market them. Platforms such as Kickstarter and Indiegogo are popular in the UK for startups selling products since they can guarantee a certain number of sales once the product launches. Alternatively, startup business owners can use online crowdfunding platforms such as Seedrs and Crowdcube to seek funding from potential investors rather than customers, but this means the investor will also secure equity in the company.

 

Startup Funding UK
Peer-to-peer business loans

Peer-to-peer business loans

‍Peer-to-peer loans, or P2P loans, are similar to crowdfunding but, whereas crowdfunds are not repayable, P2P loans must be paid back. Only becoming popular over the last decade or so, P2P is a relatively new concept in the industry. Funding Circle, the first P2P lender to launch here in the UK, was only launched in 2010. It directly connects small businesses with investors and provides them with unsecured business loans of up to £500,000.

 

Startup Funding UK
Seek funding from friends and family

Friends and family

‍For startup founders with no or little proven track record as a business owner, securing funding from traditional sources could often prove tricky. This is where finding funding from ‘Friends, Family, and Fools’ could be helpful to grow your business. The benefits of this method are that friends and families may be more flexible with repayments and less interested in performing background checks.

However, this form of funding is less likely to provide large amounts of capital (depending on your contacts, of course!). Most importantly, those seeking capital from friends and family should always understand should understand the risks involved. This is one of the riskiest forms of investment in terms of your personal life. It could have a detrimental effect on your relationships. Additionally, friends and family may request that you return their money, which professional investors do not do.

Never accept funding from friends and family who cannot afford to get that money back. Make sure they fully understand the risks they are undertaking when investing their money in your startup.

 

Startup Funding UK
Seek startup funding from VCs or Angels

VC/Angel funding

‍As of 2019, there were 327 active VC funds in the UK. Since 2011, these VC investment funds have participated in over 3,700 deals investing around £20 billion in 2,500 high-growth UK-based companies (via beauhurst.com). There is also no shortage of Angels here in the UK, either – the UK Business Angels Association has a membership total of 650.

Startup Funding UK

It is possible to approach VCs and Angels directly. However, employing the help of a startup advisor is often the best way of making contact. Startup consultants can help businesses secure funding, whether they’re at the seed stage or already medium-sized. Here at 7startup, we can help you prepare for and seek funding to start scaling up your startup. We will welcome you into our network of trusted investors to help you find the right one for your business.

Post-Brexit Opportunities and Challenges

Since the UK’s exit from the European Union, the startup landscape has seen both challenges and new opportunities. The government has introduced various incentives to attract global talent and investment, including the Startup Visa scheme and the Global Talent Visa. Additionally, new trade agreements with non-EU countries have opened up fresh markets for UK-based startups.”

  • Regulatory Adjustments: Post-Brexit, the UK has tailored its regulatory framework to better support startups, including simplified processes for setting up and scaling businesses.
  • New Trade Agreements: Startups now have access to markets in the US, Australia, and Japan, thanks to new trade deals that provide easier access and reduced tariffs.
  • Talent Attraction: The Global Talent Visa allows tech startups to attract the best minds from around the world, bypassing the more restrictive EU labour regulations.

Startup Funding UK Summary

‍The startup industry in the UK is booming and this looks set to continue even despite the COVID-19 impact. Some startup founders look to increase the chance of success of their business by seeking funding from external sources. Thankfully, there are many paths in the UK they can take to achieve this. Popular examples include securing funding from government grants and loans such as the Startup Loan scheme

Convinced the UK is the perfect place to grow your business, but unsure of where to begin seeking funding? Why not come and say hi to our expert startup consultants we can help your brilliant idea flourish into a prosperous business.

Amit Khanna

Amit Khanna, 7startup Founder

Amit is an investor and advisor with two decades of experience and an MBA. He supports entrepreneurs with fundraising & go-to-market expansion in Saudi Arabia. His strategy is built on two pillars: deep investment acumen and a vast operational network. Reach out to us today and see if we’re a fit!

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