Fundraising

Fundraising

 

Starting a business is an empowering yet daunting time. The start-up costs are generally high and the returns in the first few months are low or non-existent.

Here you will find advice on some of the key areas of concern when raising capital for your business. 

Raising capital for your business

Letter of Intent


What is it? A letter of intent (sometimes also referred to as a “letter of understanding” “heads of terms” or “memorandum of understanding” is a document that sets out the parties intention to enter into a contract in future but is not binding on the parties until they have entered into the future contract. It is used to facilitate the start of a business deal or project between your business and an investor/investor by identifying the key business and contractual terms that will form the future contract. a software agreement




Share Subscription Agreement


What is it?

A share subscription agreement is a document that you will require if you are raising capital for your start-up or allocating shares to employees in your business.

Why is it important?

It sets out:

(a) the number of shares your business is issuing

(b)any conditions such as vesting

(c) the subscription price

(d) the date of issue of the shares and any

(e) company/ founder representations and warranties.




SEIS advance assurance approval application


What is it?

This scheme is designed by the government to encourage private investors to invest in small businesses( i.e. start-ups and very early-stage companies) by providing the investor tax relief for investing. Investors can receive up to 50% tax relief in the investment year.




EIS advance assurance approval application


What is it? This scheme is designed to encourage private investors to invest in larger and more mature companies by providing investors with tax relief. The current tax relief available under this scheme to an investor is 30% of the purchased shares up to a maximum of a £1million share investment.




Deed of Adherence


What is it?

A deed of adherence is a document new shareholder of a company sign where a Shareholders’ agreement is already in place.




Online web filing of Companies House Forms


What is it?

You can now file your Companies House forms online and free or charge. By filing online, the changes are generally recorded within 24 hours. For guidance please go to the Companies House website using this link – http://www.companieshouse.gov.uk/ On the right hand side of the home page you will find 3 options : Select the top one that says “file documents online” and click the link that says “Click here to access the web filing service” . This will take you to an information page . Read this and then click the “Continue” button in the bottom right hand corner and follow the instructions.




Investment Agreement


What is it? An investment agreement will set out the terms of the agreement between your business and outside investors or existing shareholders who wish to buy shares in your business. There are various types of investment agreements eg ordinary shares investment agreement, alphabet shares investment agreement, sweat and equity investment agreement etc.




Shareholder Agreement


What is it? A shareholder agreement is used to protect the rights of existing shareholders. Common provisions include voting provisions, appointment/removal rights, minority shareholder rights, share transfer restrictions, dispute resolution clauses.




Crowdfunding


What is it? Crowdfunding is a way of raising money by asking a large amount of people to each invest a small amount of money for shares (ownership) in your business.




Angel Investment


What is it? An angel investor is an investor who uses their personal finance to provide equity finance to your business in return for shares in the business. (Think of Dragons Den!) An angel investor will normally take an active interest in your business in order to see a strong return on their investment and will support you with their knowledge and experience. Angel investors expect returns on their investment within three to eight years.




Friends and Family (Bank of Mum and Dad)


What is it?

Many start-ups turn to friends and family to help fund their venture. Don’t take your loved ones for granted – treat them in the same way as you would any formal business lender by providing them with a robust business plan and financial forecast for the next six to 12 months.

Ensure that you have a contract – a contract between the parties will avoid problems further down the line.

Seek legal advice if necessary.




Start-up Loans


What is it?

The government provides business grants to individuals and businesses through national and local organisations that you apply to and who then decide if you are eligible for funding.

For the list of government grants check out the business finance support finder at www.gov.uk





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