I'm pre-revenue. What can I raise?
Routes open to businesses that are not yet selling, from grants and tax reliefs to start-up loans and investors.
Most lenders want to see sales before they lend. Before you have any, the options are mainly money you do not pay back (grants and tax reliefs), personal loans made for new businesses, and selling part of your company to investors.
The routes below are open to businesses with no sales yet. Equity routes come last because, although they cost no interest, you give up part of your company.
19 routes to look at, cheapest first
Compare the first 4 side by side- L0
Free or nearly free
Little or no cash cost, though most take time and admin. Some bring money in, and a few have small fees.- Own cash and no-cost
Customer prepayments, deposits and pre-sales
Ask customers to pay some or all of the price before you deliver. The cash arrives before your costs, so you borrow less, but you owe customers the goods or a refund until you deliver.
Days - Grants, tax reliefs and prizes
Equity-free accelerators, fellowships and prizes
Programmes and competitions that give founders money, training or both without taking shares. Places are limited and competitive, and the money is usually modest.
MonthsUp to £75k - Grants, tax reliefs and prizes
Innovate UK grants
Competitive grants from the UK's innovation agency that pay part of the cost of innovation projects. You do not pay them back, but you must fund the rest of the project yourself.
Months - Grants, tax reliefs and prizes
Local, regional and sector grants
Grants from councils, combined authorities, the devolved governments and sector bodies, often for equipment, jobs, energy saving or exporting. You do not repay them, but they are usually small and come and go.
MonthsUp to £315k - Grants, tax reliefs and prizes
Research and development (R&D) tax relief
Companies that spend money on qualifying research and development can claim it back through Corporation Tax, as a tax credit or, for some loss-making companies, as cash.
Months - Crowdfunding and community finance
Donation-based crowdfunding
People give money to a cause or community project through an online platform and expect nothing back. It costs nothing but fees and effort, but it only works for projects people want to support.
Months - Crowdfunding and community finance
Reward-based crowdfunding
People pay in advance for a reward, often the product you plan to make, through an online platform. You give up no shares and repay nothing, but you must deliver what you promised.
Months
- Own cash and no-cost
- L1
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.- Government-backed and community lending
Community development finance (CDFI) loans
Loans from Community Development Finance Institutions, lenders that exist to support small businesses, start-ups and sole traders that mainstream banks often overlook.
DaysPersonal guarantee likely - Government-backed and community lending
Start Up Loans
A government-backed personal loan of up to £25,000 at a fixed rate, for people starting a business or in their first five years of trading, with 12 months of free mentoring.
Weeks£500 to £25k
- Government-backed and community lending
- L3
Specialist secured debt
Borrowing secured on specific assets such as invoices or stock, with more fees and conditions than mainstream debt. - Equity rungs. These routes cost no interest, but you give up part of the ownership and control of your business. They are ranked by how much you give up, not by a made-up interest rate. Over time, equity can be the most expensive money of all.E1
Light dilution
You sell a small share of the company, usually to many small investors or people you know, and keep control of how it is run.- Crowdfunding and community finance
Community shares
Co-operatives and community benefit societies raise money by selling withdrawable shares to members of the community, who get a vote and a stake in a business that matters locally.
MonthsGives up shares - Crowdfunding and community finance
Equity crowdfunding
Selling shares in your company to many investors, often including your customers, through an online platform authorised by the FCA.
MonthsGives up shares - Private equity investment
Friends and family
Money from people you know, as a loan, as shares, or both. Often the first money into a new business and on flexible terms, but it puts relationships at risk if things go wrong.
WeeksLoans, or shares if you choose - Hybrid instruments
Advance subscription agreement (ASA)
An investor pays now for shares that the company will issue later, usually at the next funding round. If set up correctly, it can qualify for SEIS or EIS tax relief, unlike most convertible loan notes.
WeeksGives up shares - Hybrid instruments
Convertible loan notes (CLNs)
An investor lends money to your company on the understanding that the loan will usually turn into shares later, often at a discount, when a set event such as the next funding round happens.
WeeksMay give up shares
- Crowdfunding and community finance
- E2
Significant dilution and investor rights
Investors take a meaningful stake and usually get rights such as a board seat, a veto over big decisions, or a preferred return.- Private equity investment
Angel investment
Experienced individuals, often investing together as a syndicate, buy a minority stake in an early-stage company and give advice and contacts as well as money.
Months£5k to £500kGives up shares - Private equity investment
Corporate venture capital
A large company invests in a smaller one that could help its own business, in return for shares. You get money plus the corporate's contacts and know-how, but you share your ideas with a possible competitor.
6 months or moreFrom £1mGives up shares - Private equity investment
Venture capital
Professional investment funds buy minority stakes in young, high-growth companies, usually in several rounds, and expect a large return when the company is sold or listed.
6 months or moreGives up shares - Tokens and digital assets
Token offerings (ICO, IEO, IDO) and crypto exchanges
Raising money by creating a cryptoasset (a "token") and selling it to buyers, directly or through a crypto exchange. It is very high risk, heavily restricted in the UK, and about to be regulated much more tightly.
MonthsMay give up shares
- Private equity investment
Worth knowing
- Many UK angel investors expect your shares to qualify for SEIS or EIS. Ask HMRC for advance assurance early.
- Grants usually pay only part of the cost, so plan how you will fund the rest.
- A personal loan for your business, such as a Start Up Loan, is owed by you even if the business fails.