How to Source Start-Up Capital

| November 16, 2015

How to Source Start-Up Capital

It has become ridiculously affordable to start a business today. If you have the right idea, are willing to work extremely hard to gain success, and don’t mind spending a few months or even a year living on a tight budget, you can start a small business and become an entrepreneur. However, being ridiculously affordable isn’t the thing as being free of cost. Starting a business is by no means free of cost.

What we mean here is that instead of several hundred thousand pounds, you might be able to establish a business to a few ten thousand pounds. There’s still some money involved and more money you have, the better off you’ll be. So where should you get your money from? Here are some not-so good and the good sources of start-up capital.

Keep It Within the Family

Some entrepreneurs ask help from their friends, family, and relatives. They might perhaps even offer a stake in the business and a percentage of the profits in return.  It’s  not always a great idea to borrow from people close to you. In fact, that might lead to some pretty difficult situations down the line. For example, if your parents lent you the money and the business failed, you’ll have to face the reprimands all your life.

If you want to borrow from your near and dear ones, be sure to first make them aware of the risks. The onus is on you to ensure that your family walks into the investment with their eyes wide open.


There are some investors that disregard their personal financial security and pour all of their savings into the business. That’s the absolutely worst thing you can do. Regardless of how confident you are in the validity of your idea, you need to make sure that you have an adequate cushion to fall back on.

A small business takes an average of 3 years to stand on its feet and start offering profits. You might have to delve into your savings a little bit, but be sure to keep something safe for a cloudy day. You don’t want to end up on the streets, after all.

The Investors

There are several levels of investors that you might encounter in your quest to find the right person or institution. Some might approach you, some might be a recommendation, and some you might seek out yourself. Regardless of the how the approach happens, it’s vital to do you background research first. Consider the following:

  • Individual Angel Investors – Individual angel investors won’t have a lot of start-up capital to throw around. You can expect anywhere from £6,000 to £60,000 of investment in the business. Of course, you need to be cautious. There are investors that only dabble in investing and they can be unreliable.
  • Angel Investing Groups – Angel investing groups are much more reliable and will have more capital. They can invest anywhere from £30,000 to £300,000 easily. There’re essentially a group of angel investors that have a share in every investment they make.

For higher range of investors, you need to look into Micro VCs, VCs, and Mega VCs, that can give you progressively higher amounts if they find your idea viable.