PricewaterhouseCoopers offer small business startup tips on not to fund a new venture while avoiding debt:
You hear in the press of all sorts of types of funding available, from debt funding, from venture capital funding, angel funding, government grants. The question is actually, how many of those really are available in the current market?
Debt funding is very, very difficult. I know the government has been encouraging particularly the banks that the government owns at the moment, to lend to businesses. And there are opportunities. But the banks are still taking commercial decisions as to who they're lending to. Debt funding is tough. It takes a lot of time to manage to debt once you've got it. And it takes probably even longer to negotiate the debt in the first place. So debt funding is a difficult place to be.
I think equity funding is what you need at the moment. There is money out there in the venture capital and private equity worlds. But the valuations that investors are willing to invest at have come down significantly.
So one area, I think, that funding seems to be more available is in some of the government-backed venture funding programs. And the government is trying to encourage entrepreneurism. So some of the government-backed funds seem to have more money and more availability to invest.
Starting a business, often the best way to kick it off and raise some funding is probably through family and friends.
For a start up business often, and especially in the current environment, sort of debt financing from banks is pretty difficult. So potentially, there is still money with venture capitalist, there still is quite a lot of funds that have still got amounts in there that they are willing to lend. There are obviously sort of government support and some aid, and some around, sort of the enterprise side which is still quite beneficial. And there’s the classic piece around almost private money and sort of angel funding that a lot of centres in the UK are promoting that kind of collaboration, with previous or existing entrepreneurs and how they funded things. But it’s a tough way but if you look at some very successful businesses who have started out in a very small way in terms of the initial financing. And how quickly they can actually monetise that and actually focus the business very much on that first period of how can we actually convert that money into cash to reinvest in the business. Which may drive slightly different behaviour during say the first sort of 6 to 9 months of a business.