Start-ups – Where to spend the funding?

Recent research suggests the majority of start-ups find it relatively easy to secure funding, but when it comes to deciding what to spend the money on, many firms struggle with the decisions.

However, the study also revealed that there is a considerable regional divide in the ease of finding funding, with new ventures in Scotland finding the process easy, while start-ups in Yorkshire and Humberside find it difficult.

Across the board, 70 per cent of the start-ups found the funding process reasonably simple but 95 per cent of this group said they faced difficulties in making spending decisions when they received the cash.

According to the research, more than one in four businesses cited economic and political uncertainty as one of their biggest challenges in spending money on growing the business.

Of those who secured funding, 44 per cent did so through a bank loan, while 26 per cent used an alternative loan provider. However, ‘bootstrapping’ is still one of the most popular ways of starting a business, with 40 per cent of startups saying they use personal savings to start up.

Meanwhile, almost 20 per cent said they do not have the necessary financial insight to make spending decisions and 25 per cent claimed they were held back by personal fears about making the wrong spending decision.

As one of the study’s authors commented, start-ups are unable to overcome these fears and make confident decisions because of a lack of financial insight in these turbulent political and economic times.

Leave a Reply