How to choose a funding route, and when raising money actually pays.

Techcelerate’s view is simple: win customers and revenue first, de-risk the business, then raise only if it pays. That is not an argument against investment. It is an argument for raising at the right time, for the right reason, on the right terms. This guide gives the finance view of the options. The funding guide and how investors think go much deeper into the process and investor mindset.

Start with the question “what would the money do”

Write one paragraph: how much, spent on what, delivering which milestone, by when. If you cannot connect the money to a measurable result, such as reaching a revenue level, proving a channel or completing a product that customers have already asked for, you are not ready to raise. This becomes your use of funds.

The main options

If you plan to raise from UK angels, look at SEIS and EIS advance assurance early; many angels expect it.

When raising pays

• You have evidence that more money produces more revenue: a channel with known CAC and payback, or a sales process that converts predictably.
• The dilution costs less than the value the money creates. The cap table and dilution simulator shows what you give up.
• You have at least six months of runway when you start, so you can walk away from bad terms.
• You are “default alive” or close to it, so investment accelerates the business rather than rescues it.

Prepare the finance side before you talk to anyone

1. Close the books for the last 12 months, or since incorporation, and make sure management accounts reconcile to the bank.
2. Build a driver-based forecast with base and downside cases, showing what the round funds and what happens to runway if it takes twice as long to close.
3. Prepare a metrics page: revenue, growth, gross margin, churn, CAC payback and net burn, defined consistently month by month.
4. Tidy the cap table and confirm every share issue was filed correctly at Companies House.
5. Open a simple data room early, so due diligence does not stall the round. See due diligence and data rooms.

Worked example

Stackhaven is a fictional Newcastle tech startup selling IT asset management software to schools. After 18 months of bootstrapping it reached £25,000 MRR, growing steadily through school business managers recommending it to each other. An investor offered a seed round. The founding team modelled two paths: stay bootstrapped and hire one salesperson from revenue, or raise and hire four. Its referral-led channel had a CAC payback of four months, but outbound sales to schools were untested. The team chose to fund one outbound hire from revenue for two quarters first. When outbound proved a payback under nine months, it raised a smaller round on better terms, with a clear use of funds.

Common mistakes

• Raising because others are, rather than because the money has a job.
• Starting with too little runway left.
• Counting grant money before it is awarded, or forgetting it is often paid in arrears.
• Ignoring personal guarantees on loans.
• Choosing VC for a business that will be a very good, steady company rather than a very large one. See is VC right for you?

What to measure

• Runway at the start of any raise.
• Funding readiness across traction, team and metrics, with the funding readiness score.
• Dilution per round and founding team ownership after it.
• Revenue or milestone achieved per pound raised.

For government-backed options, see business finance support on GOV.UK.