Technology development is expensive and typically revenue lags far behind the costs of product and business development. This funding gap can be covered by raising capital from a wide range of sources, including Innovations' own Venture Capital group. Science-based startups typically get through the Proof of Concept phase using commercialisation grants from government bodies and often then take on ‘angel’ funding from wealthy individuals or may skip straight to funding from Venture Capitalists (VCs). Investment funding is significantly different from grants: investors are not risking their money to benefit society but for a return, so they will expect you to be able to show that you intend to return many times the amount invested.
Regardless of whether your venture is appropriate for Imperial Innovations’ own VC fund, the Co.Create group will work with you to produce a convincing case and source funds across as wide a range of sources as relevant, from crowd to VC.
We will help to prepare convincing material (business plan and pitch) and create introductions to our network of angels and investors (including our internal VC team where appropriate). We will then act as an advisor throughout the deal negotiation.
Next step: Scaling customer acquisition
Different types of funding at different stages
Depending on the problem that the business is addressing there are often translation grants available from non-profit organisations such as the UK Government (Innovate UK, BBSRC, EPSRC), EU (ICT & Climate KIC) and host of niche competitions. It is often worth applying to these sources as it allows you to increase the value of the company before taking on dilutive equity funding. We keep a close eye on relevant grants and will assist with applications.
Friends and family
Loans/donations from your family and friends can be a great source of cash for your business without giving away equity. Do make sure that your benefactors are aware of the risks and that if the business fails, the money would most likely not be recovered.
Business Angels, Angel Syndicates
Business angels are wealthy individual investors who invest in young businesses, usually in return for equity. A business angel could potentially bring not only money but invaluable advice, contacts and sector knowledge. An angel will often ask for a seat on the board and will seek to have some level of involvement. Angels could also work in groups called “Angel syndicates”. They are usually represented by a single angel leading the investment. We work with all of the major angel networks.
Family offices serve a single, ultra-high net worth families or a group of very wealthy families. Among other services, family offices offer investment advice to the family and will sometimes invest in promising early stage enterprise.
Crowdfunding can be used to raise funds from a large collection of individuals, usually via internet platforms. Nesta have a great tool for finding the right crowd funding site for you.
Equity based crowdfunding is where equity is given away in return for the investment. Often, company shareholders hold a tiny fraction of the company due to the mass-sourcing nature of crowdfunding.
Reward/donation based crowdfunding is where the funders receive goods or non-equity rewards in return for investment, or none at all in the case of donation. Kickstartr and IndieGoGo are the most well-known examples and we’ve worked with several teams which have taken this route.
Accelerators and some inclusive incubator programmes are designed to provide startups with a small amount of capital (£10-25k) and an intense environment to grow and develop in. These programs tend to be focused in in specific industry sectors or topics and quality varies considerably.
Venture capital funds typically invest large sums (£250k-£100m) in later stage companies which have a clear business model. There are exceptions to the rule and some funds (including our own internal fund) will make riskier investments into seed-stage and pre-revenue companies. In return for their funding, a VC investor will take an equity stake and usually a seat on the board of directors. Good VCs will have investment staff highly focused on a specific sector as they will seek to get deeply involved in scaling the company. We will help you reach out to the right investor at the right time.