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Source of funding for early-stage business


Business incubators and accelerators are programmes designed to provide support to start-ups in their initial stages of development. They often provide a combination of office space, mentoring, networking opportunities, training programmes, marketing advice, professional services such as accountants and lawyers, and access to fundraising opportunities. They offer time-limited support, often with intensive mentoring. Some accelerators will provide initial investment (usually between £10,000 and £50,000), typically in exchange for equity. Accelerators and incubators are likely to run programmes in cohorts of entrepreneurs who start and finish the programme at the same time, and work in a shared office space. The programmes may be venture-backed (i.e. venture capitalists or angel investors), government-backed or corporate-sponsored.

Angel investor

Angel investors are wealthy individuals who invest in early- stage start-ups, as well as established companies, in return for an equity stake. This tends to be an initial investment made by an individual or a small group of individuals (called an angel network or syndicate), generally in the range of £10,000 to £100,000. Angels not only bring vital early-stage finance, but also offer business experience, access to customers and strategic advice to help build and scale a business.

Venture capital

Venture capital firms invest money raised from multiple investors into companies with long-term growth potential. Typically, the investment amount is significantly higher than angel investment, and is generally considered a funding option at a later stage of development. Like angel investors, they have contacts and experience to contribute but typically require a seat on the board of directors of the company.


Crowdfunding involves raising small financial contributions from a large number of individual investors in order to fund early-stage business ventures. The typical model involves the entrepreneur pitching their business idea on an online crowdfunding platform where prospective investors can browse a number of ventures. Return to investors may be based on equity, debt or rewards.

  • Sources: Nesta (2014a), Nesta (2014b), UK Business Angels Association (2012), UK Business Angels Association response to MAC call for evidence