Getting Finance for Your High Growth Company

Growing Strains

50% of startup businesses fail in the first five years. There’s no doubt that several complex factors contribute to those failures – from a poorly executed business plan to external issues beyond the business owner’s control – but lack of funding, and the inability to invest in the next stage of a company’s growth, should never be the reason for a startup business not realising their full potential.

Our video series, Growing Strains, talks to the founders of a number of UK based companies and provides unique insights into the journey these businesses took to transform from fledgling startups to profitable high-growth brands.

And one of the key insights shared by them, one which significantly contributed to their ability to move the business forward and grow, was having access to funding at exactly the right time. Funding to expand their teams, buy more equipment, invest in their marketing activities, get bigger premises and to buy the best tech to ensure their teams were operating at maximum efficiency.

We’re looking at some of the funding options available to businesses, whether they’re an ambitious new startup or a more established SME looking to reach the next stage of their growth.

Seed Capital

Seed capital is an early source of investment. You’ll need this once you’ve identified a clear market and now want to get your business off the ground. This funding generally covers the initial costs of a startup, from beginning to develop ideas and creating a proposition to buying stock and equipment. It’s usually obtained from more informal sources such as:

Personal savings
Remortgage of your home
Bank loans
Loans from family members or friends

Once you’ve secured your seed capital, are up and running and trading they’ll come a time when you’ll start looking at the next stage of growth for your business. It’s at this stage that you’ll likely want to explore more formal forms of funding.

Business Lease Packages

Buying the best hardware, like Apple products, isn’t cheap. But as with most premium brands, the short-term hit on the budget will pay long-term benefits as cutting-edge tech lasts longer and performs better.

You’ll want to make sure you’re getting expert advice for the type of lease your company needs so speak with a Credit Broker (always checking that they’re registered with the Financial Conduct Authority). They can introduce you to commercial lenders who’ll put together the right finance package for you to lease your hardware – taking into account your appetite for actually owning the hardware at the end of the lease period or whether you’re happy to churn and buy new again.

There are several leasing options available, including:

Hire Purchase
Hire purchase is a way to buy assets by paying in instalments over time. With hire purchase, you legally own the item once all the instalments have been paid.

Finance Lease
A finance lease is a type of equipment lease where the customer rents an asset for most of the item’s useful life. Finance leases are sometimes also known as capital leases.

Operating Lease
An operating lease is slightly different from a finance lease as the customer rents the asset for a fraction of the item’s useful life. An operating lease might also be known as business contract hire, particularly if it relates to commercial vehicles.

Leasing not only cuts down on your capital expenditure but often includes project fees for implementing the new hardware and the cost of your actual IT Support Contract, depending on the ratio of hardware to professional services.

Whichever finance option you choose, you won’t have to compromise on quality or innovation because of budget constraints.

Watch our latest Growing Strains instalment to see how important it was for A2V to invest in their tech.

Angel Investors

The next stage of investing usually comes in the form of Angel investors. An Angel investor is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, in exchange for a minority stake in the company.

Much like what we see on BBC’s Dragon’s Den, Angel investors tend to be entrepreneurs themselves with extensive experience in the business world. They would normally need to see evidence of your company’s growth potential and a sound, honest business plan and in return their financial backing helps with the following:

Developing and scaling up your business
Increasing funding for product development and marketing
Expanding your team

Venture Capital

This form of investment comes from firms who leverage personal and institutional capital to purchase stakes in high-growth businesses. Venture capital (VC) firms are the largest providers of equity funding for early-stage businesses in the UK, and they’re the next step for businesses looking to level up.

Similarly to Angel investors, VC firms invest in companies in exchange for equity. However, they’re often inundated with investment opportunities, and with so much noise to cut through it can be hard to get noticed.

For brands who successfully secure venture capital funding, they can use this investment to scale their business by:

– Developing new products
– Expanding into new markets including international development
– Acquiring other companies

So from seed capital to venture capital, there’s a different investment opportunity for every stage of your business.

If your business is at the stage where you now need new technology then speak to us. Dr Logic is registered with the FCA as a credit broker – we believe to fully support our clients we need to understand their funding challenges as much as we understand their tech needs.

Watch our Growing Strains video series to see how high-growth businesses have overcome challenges to level up.