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Introduction to the UK private finance landscape

A Fundmap was produced by the Electronics KTN in 2009 and is available online at:

The Fundmap provides an extensive list of the UK organisations providing private sources of capital to companies of the technology industry sector (it is not Healthtech-specific). For each source of funding, eligibility criteria and contact details are given.

It is important to differentiate between the different categories of private funding. Figure 2 shows that the different sources of private funding are suited to specific stages of the company growth cycle, from start-up to publicly-traded company.

capital raising 

Figure 2 Different sources of private funding along the company growth timeline
(© New South Wales, 2006)[1] - Reproduced by permission Industry and Investment NSW.

Several sources of private funding are referred to in Figure 2 and the associated definitions are as follow:

  • Debt finance is one common category of funding for companies and includes bank loans, overdrafts, mortgages and equipment leases.
  • Equity investment is a second category of funding for companies and can come from an owner’s funds or external investors such as friends and family, venture capitalists, financial institutions and business angels. The most significant difference between equity finance and debt finance is that the equity involves the investor taking an ownership position in the business. Attracting equity investment is not an easy process and second chances are rare, especially for ‘Public float’ (ie initial public offerings).

Those different sources of private funding also have different conditions associated to them, and in particular the associated cost and risk can vary quite considerably as summarised in Table 1.

private funding characteristics

Table 1 Characteristics of different sources of private funding
(© New South Wales, 2006) [2] - Reproduced by permission Industry and Investment NSW


Access to private finance from Business Angels

Business Angels as listed by the British Business Angels Association (BBAA)

The British Business Angels Association (BBAA) is the National Trade Association for the UK’s Business Angel Networks and the early stage investment market and is supported by the Department for Business, Innovation and Skills.

The BBAA website is a central portal for entrepreneurs and companies seeking funding and investors looking to invest in early-stage businesses.

The BBAA website hosts a member directory where one can find the most appropriate business angel judged on their location, their specialisations or their investment criteria.

Further access to Business Angels is through your local Business Link or through browsing the Electronics KTN Fundmap.


Access to private finance from Venture Capital Funds

British Venture Capital Association (BVCA)

The BVCA is the industry body for the UK private equity and venture capital Industry. It has a membership list of over 400, representing a majority of UK-based private equity and venture capital firms and their advisers. They do not list investors operating in the life sciences space, but may be able to provide information if contacted directly.

Further access to Venture Capital Funds is through your local Business Link or through browsing the Electronics KTN Fundmap.


Other private finance mechanisms

UK Enterprise Capital Funds (ECFs)

Enterprise Capital Funds (ECFs) address a market weakness in the provision of equity finance to SMEs by using Government funding alongside private sector investment to establish funds that operate within the ‘equity gap’. An equity gap arises where businesses with viable investment propositions are unable to attract investment from informal investors or venture capitalists.

In April 2008, responsibility for the management of ECFs along with BIS’s other equity funds and the Small Firms Loan Guarantee (SFLG) was transferred to a new body, Capital for Enterprise Limited (CfEL]. This is aimed at improving the selection and management of the funds, but did not change the nature of the funds or their policy objectives. Additionally, CfEL are now responsible for the management of the Enterprise Finance Guarantee (EFG).

Enterprise Capital funds replace previous products such as the Regional Venture Capital Funds, which are now closed for new applications.

Companies who wish to apply for funding from particular ECFs should contact the appropriate fund manager via the links below:

This information was taken from:


UK Innovation Investment Fund (UKIIF)

In 2009 the UK Innovation Investment Fund (UKIIF) was created to invest in technology-based businesses with high growth potential. The UKIIF is ‘owned’ by the Department of Business Innovation and Skills (BIS) and focuses on investing in growing small businesses, start-ups and spin-outs, in digital and life sciences, low-carbon technologies and advanced manufacturing.

UKIIF operates on a Fund of Funds structure which means it does not invest directly in companies, but rather invests in a small number of specialist private sector technology funds that have the expertise and track record to invest directly in technology businesses. Specific fund managers are recruited to manage the fund and the European Investment Fund (EIF) is one of the fund managers.

As a result of the Office of Life Sciences, a proportion of the funds are dedicated to the life sciences sector.


UK Growth Fund for SMEs

The BGFBusiness Growth Fund is a major new £2.5 billion equity investment capital fund backed by five of the largest banks in the UK. It provides finance to UK SMEs seeking between £2 million and £10 million with priority given to those companies with high growth potential.

The fund is open to all technology businesses (and others).


Further support to accessing funding

Business Link's No-Nonsense Guides, produced in conjunction with government departments, offer businesses clear and jargon-free guidance on complex key issues. There are currently two ‘No-Nonsense Guides’ covering financial aspects:

  • Finance for High Growth Innovative Businesses
  • Small Business Funding

While those guides are not addressed and tailored specifically to any given industry, the HealthTech and Medicines KTN recommends them as they provide a good basis for understanding of the landscape of funding and finance mechanisms available to the UK industry. The two guides can be consulted on:

[1] New South Wales - Department of state and regional development (2006); ‘Funding Business Growth - a guide to raising capital’

[2] New South Wales - Department of state and regional development (2006); ‘Funding Business Growth - a guide to raising capital’