Navigating the London Tech Start-up Scene Part II
So you have a business idea and Part I of this series of blog posts has peaked your interest in coming to London. Now, you may be wondering, is London a good place to secure funding? In Part II of the series, we start to explore some funding options for your start-up and how you may get that initial capital to kick off your business. This is by no means a complete list but these may provide you with some starting points for your own research.
Venture Capitalists
While European investors have a reputation of being less generous than their American peers, some investors are starting to warm up to the culture of entrepreneurship and its inherent risks. If you have more of a go big or go home approach to entrepreneurship, you may want to start by looking at some historically major players such as Index Ventures who have been around for over 20 years and cover a wide range of sectors from Gaming to E-Commerce. Ever use Skype? If so, you have Index Ventures to thank for. Another granddaddy of European VC firms is Balderton Capital, Europe’s largest venture fund with a starting investment of $1M. Where would we wary Londoners be if Balderton hadn’t funded Citymapper? There are also a plethora of smaller but none the less noteworthy firms that invest in early stage start-ups that you may want to look into, such as Passion Capital, 83North, Notion Capital, and Mosaic Ventures.
Angel Investors
UK Business Angels Association connects a network of angel investors with tech companies. Not only does the association run events for its investor members, it also runs workshops to help entrepreneurs learn more about how to raise funding. If you or someone on your founding team is a woman, then you may want to look into Angel Academe, which is a network of female angel investors in the UK. Angel Academe’s existing portfolio includes start-ups in digital media, retrial, ed tech, health tech, and B2B business models.
Accelerators
There are a 32 incubators and accelerators in London with several corporate-backed programmes including Microsoft Ventures, Wayra (Backed by O2 Telefonica), JLab(John Lewis), Barclays Accelerator, and Red Bull Amplifier. These accelerators are more sector-specific, which means that the start-ups in these environments have an opportunity to access large clients. According to a Telefonica 2014 report, there may be as many accelerators per capita in Europe as across the pond in the States and the UK leads the most programmes in Europe. While accelerators here tend to offer pre-seed funding, incubators are more likely to help start-ups prepare to raise investment through their networks. Most investments from London accelerators range from £10- £20k per time with an average equity of 8%*. There are also other sector specific accelerators specializing in fashion, food, healthcare, education, and social entrepreneurship.
Small Business Loans
Lastly, an often overlooked source of funding is small business loans. Virgin StartUp, for example, is a non-profit organization supported by British Entrepreneur Extraordinaire Richard Branson, which provides loans to qualified England-based businesses run by British citizens or UK legal residents. The City Of London also grants micro loans for up to £10k if you can demonstrate that your business can contribute job creation in the city.
*Figures from The rise of the UK accelerator and incubator ecosystem report by Telephonica.
Check out part one of the Navigating the London Tech Startup Scene series here