Starting a family business takes a significant amount of time, commitment and money. You may already be willing and able to contribute the first two, but if you don’t have the resources or money to back your new business, you may struggle to get your family business off the ground.

Finding funding for your new business is one of the most challenging aspects of starting and scaling a family business. Family businesses need funding to help grow their business and protect their interests.

There are a number of financial options available to UK family start-ups but choosing the right one can often be difficult. Understanding the options available to you and the right funding for your business will ensure that you get the right investment to help you succeed.

Government Funding

The UK government offers a wide range of funding and grants to new businesses, and with the government placing support for new businesses as one of its core aims, the funding opportunities for start-up businesses have never been greater.

From R&D Tax Credits to start-up loans and grants, there are a number of different types of government funding a family business can consider when starting up.

At Brabners, we stay up-to-date with all public and semi-public sources, ensuring you have the latest options available to you. We have key relationships with many of the funding bodies and can advise on your applications and all commercial considerations you need to understand.

Crowdfunding

Crowdfunding platforms are becoming an increasingly popular alternative to traditional funding streams, and there are different types of crowdfunding models to consider.

The most attractive type of crowdfunding to start-ups is known as equity-based (or investment-based) crowdfunding which involves businesses offering investors a proportion of equity in exchange for those investors contributing funds. You can read more about the different types of crowdfunding in my recent blog here.

There are various steps a business will need to take if it decides to engage in crowdfunding, and not every business is suited to this type of funding. We can advise family businesses on the various steps to consider if you decide to engage in a crowdfunding round, including the different forms of crowdfunding, pre-funding plans, and the funding process.

Debt Funding

Debt funding or debt finance works when a business raises money from a lender with a promise to repay the money at a later date and can typically be raised through debt securities or a bank loan.

Debt funding is a common source of funding for businesses but can be expensive or difficult to obtain for a start-up family business. There are, however, a number of suitable debt funding options for family business start-ups including start-up loans or short-term business loans.

Equity Funding

Private equity funds involve businesses offering shares to investors in exchange for investment capital. Investors are typically made up of venture capitalists, angels or other private equity funders who will want to ensure the investment is right for their portfolio.

Investors can also obtain tax relief through EIS and SEIS government schemes when investing in early-stage companies, so applying to those schemes can help in any investment pitch.

We advise on the full range of private funding arrangements, providing commercial and practice support to help secure funding for your family business. Whether you seek angel, venture capital, private equity or public funding, we can work with family business start-ups and guide you through the process.

Please don’t hesitate to get in touch with a member of the Family Business team at Brabners to discuss how we can assist you with any of the issues covered in this article.