If your design agency needs a cash injection to reach the next level, look for specialists in creative funding.
Growing a small or medium-sized business is tricky and expensive, and design agencies are no exception. Whether it’s a move to bigger premises, hiring more staff or even a second office in another city, design businesses are just as likely as any enterprise to find themselves needing external funding.
Knowing where to start when seeking funding is difficult, because there are so many options, only a minority of which will be suitable for design agencies.
Two of the most common sources of funding for businesses of any kind are business angels and venture capitalists. Business angels are wealthy individuals who invest on their own, or as part of a syndicate, in high-growth businesses.
Venture capital, meanwhile, is a form of private equity typically provided by professional outside investors to growth businesses. This is usually a cash-for-shares deal.
For design agencies, business angels are likely to be more appropriate at first, as the bulk of such financing is for packages of between £50-£250,000. If further funding is required to facilitate the next stage of growth (typically £2 million plus), this is more commonly venture capital.
With business angels, your greatest chance of success is to seek one who has experience in the design sector, because as well as money, they may well make their own skills, experience and contacts available to you.
You can pay an intermediary to help investigate this option. For more information about business angels, visit the British Business Angels Association (www.bbaa.org.uk). Venture capital is highly selective; venture capitalists invest in fewer than five per cent of the opportunities they see, and they see many.
Your design agency must have potential for high growth, and have a management team that can achieve such growth. Again, you can increase your chances by using a reputable intermediary – they will help to focus your efforts, and should know the preferences and criteria of likely investors.
But most of all, remember venture capitalists like facts and figures, not projections, guesses and speculations. Include a SWOT (strength, weaknesses, opportunities and threats) analysis of your design agency in your proposal, and don’t pull any punches on the weaknesses and threats – all businesses have them, and venture capitalists will expect you to know what they are so that you can deal with them.
National and local government funding is another option for design agencies. Many of the London-based schemes require that you set up your venture in, or relocate to, a so-called Objective 2 area.
These are areas suffering industrial decline, urban deprivation, low economic activity and social exclusion. Borough councils are keen to see start-ups and small- to medium-sized businesses such as design agencies move to such areas.
Grants can be another source of funding, but before applying for one, first identify planned projects that might qualify – and, crucially, never take on unsuitable design projects just because a grant is available.
You will also need to ensure that your design business has funds to invest in the project itself, because typically grants cover only between 15-60 per cent of the costs of any project. It’s worth remembering that a number of the organizations featured here offer business training, some of which is free.
0117 915 0190
ArtsMatrix is the skills and enterprise development agency for creative practitioners in the South West of England. It enables arts and creative industries professionals to develop skills to make the most of their careers.
Its services include one-to-one professional development planning, skills audits, sector-specific seminars, and training programmes. The service is available to anyone working professionally in the arts and creative industries in the South West of England at any stage of their career.
ArtsMatrix has also been selected to deliver the £800,000 Skills Development Programme, under which hundreds of creative industries businesspeople in south-west England will be given greater access to new skills that will help them grow their businesses.
08457 969 798
Business Eye is a free, impartial information service for businesses in Wales. It caters to established companies, start-ups, and sole traders, putting them in contact with support from the public, private or voluntary sectors.
Creative Business Accelerator
020 7403 0300
Creative Business Accelerator (CBA) is a free service aimed at owners of both early stage and established businesses in London’s creative industry sector who want to attract equity investment.
The programme “addresses the difficulties many businesses face in securing funding from investors who prefer established businesses and the economies of scale of larger investments”. CBA will assess your business, and if it decides it’s suitable, you will take an intensive course providing guidance and advice on developing a business plan, sources of finance, legal and intellectual property issues as well as valuing your business.
Creative Capital Fund
0870 909 6333
This was established through Creative London, the agency for the creative industries that’s part of the London Development Agency. The CCF works closely with small- to medium-sized businesses throughout London, offering investment, mentoring and support.
The fund is available for businesses based in Greater London, with a portion of funding allocated for investment in so-called ‘Objective 2’ deprived areas. The CCF makes equity investments of up to £500,000 in promising early stage companies.
Every £1 invested by the CCF must be matched by £1 in equity from private investors on the same terms. Typically, the CCF will invest up to £75,000 in the first instance.
EU Media Programme
Media is the EU support programme for the European audiovisual industry. It co-finances training initiatives for audiovisual industry professionals, the development of production projects (including new media and animation), as well as the promotion of European audiovisual works.
The programme comprises a series of support measures for this area, including training, developing production projects, and distributing and promoting projects. The European Parliament also voted a budget of €2 million in December, with the aim of strengthening cooperation between audiovisual industries of third world countries and European countries.
Greater London Enterprise
020 7403 0300
Greater London Enterprise (GLE) is London’s economic development company, wholly owned by all 33 London boroughs to deliver economic regeneration in the capital. GLE manages £40 million, a portion of which is to support businesses.
It provides a broad range of finance packages for small and medium-sized enterprises (SMEs). Financial packages include: loans to start your business; loans of up to £7,500 to help get your business off the ground; and loans of up to £40,000 to help you develop your business further. It also offers free marketing and business planning training courses.
020 7514 2138
Innovation Central awards bursaries to help small, innovative businesses in Camden and Islington grow and prosper. You can apply for an award of up to £3,500 towards the cost of developing your business plan and putting it into action.
A total of 15 bursaries are made each year, with the emphasis being on high-growth businesses that will create jobs and business opportunities in the area. The deadline for applications for the next round of bursaries is March 29, 2008.
LDA Loan Fund
020 7593 9000
The London Development Agency (LDA) has developed a £10 million loan programme jointly funded by the EU with a 40 per cent private sector contribution from Barclays Bank. The fund addresses gaps in funding available for businesses within so-called Objective 2 deprived areas of London.
Loans are available to businesses looking to start or grow a business, are available at interest rates comparable a bank’s, and are repayable monthly over a period that suits the individual business owner. The LDA Loan Fund can provide loans of £5,000- £50,000 for small and start-up SMEs and larger loans of £50,000-£250,000 for SMEs.
Selective Finance for Investment in England
020 7593 8688
This scheme, managed by the London Development Agency, provides grants to businesses towards the capital investment costs of a project that will contribute to the local area’s skills, employment and economy. Under the scheme, SMEs anywhere in London can receive a grant from 7.5 per cent up to a maximum of 15 per cent of a project’s total capital expenditure. The minimum grant is £10,000; projects involving investment of less than £70,000 will not normally qualify.
South West Design Forum
The South West has a high concentration of professional designers and design businesses; the SWDF connects these designers and businesses, and works to share ideas between sub-regional and cultural agencies, national design bodies, higher education institutions, and other key public and private sector organizations.
South West Screen
0117 952 9977
South West Screen is the film, television and digital media agency for the South West of England. Its main areas of work are business support, locations, creative development, exhibition, training, education and funding. Its work attracts funding from the South West Regional Development Agency.
020 8320 9440
Think Big is a programme to accelerate and diversify the growth of businesses in the Thames Gateway region. A dedicated innovation team helps small and medium-sized enterprises (SMEs) exploit technology and business support services.
Think Big works with companies to gain finance and grants, find technologies to improve products or process, research new markets, and innovate. In order to be eligible for support, your company must be an SME located in, or wanting to relocate to, the Objective 2 Region of the Thames Gateway.
This is a business support organization providing advice and specialist knowledge on strategy, marketing and finance. It provides business support and advice to SMEs and entrepreneurs in the area. Venture Wales can review your finance needs to help you develop your investment plan.
After evaluating your plan, its finance team will help you secure additional funding via its database of grants, loans and awards. It also works with a number of investment networks, and they can introduce business owners to investors. The initial meeting with a consultant is free.