Venture Capital
Engineering development is not normally financed by venture capital, unless the project has the capacity to significantly increase the growth potential of the business. Venture capital investors usually take equity, ie a share, of the business in return for their investment - as such, their returns are linked to an increase in value of the business.
Business Angels
Business Angels are private individuals who invest directly into businesses, often bringing expertise as well as cash. Individuals range from “family and friends” to previously unknown private investors generally introduced by a Business Angel Network.
There are a number of Business Angel Networks:
- London Business Angels Ltd
- British Business Angels Association
- Beer and Partners
- Equity Link
- Technology Business Angels
The British Venture Capital Association website includes a downloadable report about Business Angel Finance, including details of key Business Angel Networks across the UK.
Formal Venture Capital
This is provided by Private Equity Funds and generally restricted to larger sums than required normally by SMEs.
Private Equity firms will very probably expect to be involved in the development of the businesses in which they invest, although day-to-day management control is not sought.
The British Venture Capital Association website offers a searchable directory of private equity funds, as well as further information about private equity investment.
Other Options
SMEs seeking investment should consider the government-backed Regional Venture Capital Funds. The Capital Fund is the RVCF for London.
NESTA, funded by an endowment from the National Lottery, specialises in early stage funding across science, technology, the arts and learning.
