How to explore funding options for tech startups

Securing external capital is often the catalyst that turns a side hustle into a scalable tech business by funding rapid development and marketing.

To find the right funding for your tech startup, you must first determine how much equity you are willing to give away versus how much control you want to keep. In the UK, the most common route involves making your company 'investment-ready' through tax incentive schemes like SEIS and EIS, which significantly reduce the risk for private investors, followed by applying for competitive government grants and pitching to angel investors or venture capitalists.

Understanding UK Tax Incentives (SEIS and EIS)

Before you approach any private investor in the UK, you should understand the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). These are government-backed schemes that offer massive tax breaks to individual investors who buy shares in your company.

SEIS: Designed for very early-stage companies. It allows investors to claim 50% tax relief on investments up to £200,000.
EIS: Aimed at slightly more mature startups, offering 30% tax relief on larger investment amounts.

Most UK angel investors will not even look at a pitch unless you have 'Advance Assurance' from HMRC, which is a document proving your company qualifies for these schemes.

Government Grants and Non-Dilutive Funding

If you want to grow without giving away shares (equity), grants are your best friend. Innovate UK is the primary body for this, offering various competitions for tech businesses working on 'game-changing' or highly innovative projects. Unlike a loan, you don't pay this back, and unlike investment, you don't give away parts of your business.

Tip: Grant applications are notoriously time-consuming and competitive. Ensure your project aligns perfectly with the specific scope of the grant competition before spending weeks on the paperwork.

Angel Investors vs. Venture Capital

Once you have your SEIS/EIS status and perhaps a small grant, you can look for private equity:

Funding Source	Typical Stage	What they offer
Angel Investors	Early/Seed	Individual high-net-worth people who invest their own money. They often provide mentorship and industry contacts.
Venture Capital (VC)	Scaling/Growth	Professional firms that invest other people's money. They expect very high growth and usually require a seat on your board.

How to Start Your Search

Calculate your 'runway': Determine exactly how much money you need to survive for the next 12 to 18 months.
Apply for Advance Assurance: Visit the GOV.UK website to start the SEIS/EIS application process.
Search the UK Grant Directory: Check the Innovate UK 'innovation funding service' regularly for relevant competitions.
Build a 'Pitch Deck': Create a 10-12 slide presentation covering the problem, your solution, the market size, and your financial projections.
Network: Join UK-based tech hubs like Tech Nation or regional accelerators to get introductions to angel networks.

Remember, the best time to look for funding is when you don't desperately need it. Investors are attracted to momentum, so focus on showing early user interest or a working prototype while you conduct your research.

Created by hatch. • Updated on April 28, 2026