Introduction
Financing a new business can be one of the biggest hurdles entrepreneurs face. Some 85% of start-ups launched in the last three years have relied on the founder’s personal capital as the initial source of funding.
Followed by contributions from family and friends (20%), and 13% taking out a bank loan. While such bootstrapping could indicate an initial preference to maintain control of the business for as long as possible, nearly two-thirds (62%) of founders state that access to finance is their biggest challenge over the next twelve months, suggesting that ambitious start-ups need further funding to grow their business.
The findings are part of a new report released today – Ambitious UK Start-Ups: The Future of UK Business, which draws on data gathered from more than 1,200 businesses that entered the 2023 National StartUp Awards – a programme that celebrates the best new firms under three years old, delivered in partnership with Starling Bank.
Solo vs Team-based Entrepreneurship
The study reveals that while 59% of new businesses have one founder, 41% have two or more entrepreneurs involved in starting and managing the business.
By gender, 49% of new businesses with more than one founder consist of all-male teams, and 36% have mixed-gender teams. Just 15% of team-based ventures are all-female.
Habitual Entrepreneurs and the Role of Parents
Four out of ten start-up founders (41%) have had previous experience of starting their own business. Of those, 47% have launched two or more enterprises before getting involved in their current business, bringing valuable knowledge, transferable skills, and resilience gained from previous ventures.
39% of founders had parents who were entrepreneurs, exposing these individuals to business concepts, challenges, and opportunities from an early age. 42% of female entrepreneurs who are the lead founders of their business had entrepreneurial parents compared to 36% of their male equivalents. Regionally, those founders based in the more prosperous areas* of the UK (42%) were more likely to have a father or a mother who were entrepreneurs than those in the rest of the UK (36%).
Challenger Banks are the Preferred Choice for Start-Ups
Although traditional banks have served businesses for decades, start-ups are accessing finance in a very different way. Two-thirds of all start-ups (67%) have accounts with challenger banks or new fintech firms. Starling Bank is the most favoured banking partner for UK start-up founders in this study (31%), followed by NatWest (10%) and Barclays (9%) in the top three.
Business Support for New Firms
According to the report, over half of new businesses will need support over the next 12 months. The biggest issues facing start-ups include access to finance (62%), marketing and sales support (57%), access to talent (56%), and having access to new markets (52%) for international expansion.
“This report gets to the heart of the entrepreneurial community in the UK. It captures inspirational stories from founders, while also shedding light on what support is needed as their start-ups evolve – whether that be increasing access to capital, strategic advice, or better understanding of business finances.”
Harriet Rees, CIO at Starling Bank
Ambitious UK Start-Ups: The Future of UK Business report is available to download at https://startupawards.uk/ambitious-uk-startups-2023/
