How to Raise Your First Round: A Practical Guide for UK Founders
Raising your first round means selling a small share of your company to investors to fund the next stage of growth. For most UK startups that first round is a pre-seed or seed round from angel investors, often under the government's SEIS or EIS tax schemes. This guide walks through the decisions and paperwork in the order you'll meet them.
1. Decide whether you need to raise at all
Investment isn't the only way to fund a young business, and every round gives away part of your company. Before you raise, check whether revenue, a grant or a loan could get you to your next milestone instead.
| Funding option | What it is | Do you give up shares? |
|---|---|---|
| Bootstrapping | Funding growth from your own savings and early revenue | No |
| Start Up Loans | A government-backed personal loan for starting a business, with free mentoring | No |
| Grants | Competitive funding for innovation projects, for example from Innovate UK | No |
| Angel investors | Individuals investing their own money, often in pre-seed and seed rounds | Yes |
| Equity crowdfunding | Many smaller investors buying shares through an FCA-regulated platform | Yes |
| Venture capital | Funds investing larger amounts, usually once there is traction | Yes |
2. Work out how much to raise
Raise enough to reach a clear milestone, such as launching your product, winning your first paying customers or proving a sales channel, with a buffer for delays. Build a month-by-month budget of what that milestone costs, then add a contingency. Investors will ask how you arrived at the number, and "what it takes to reach the next milestone" is a far stronger answer than a round figure.
3. Check whether you qualify for SEIS or EIS
The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) give investors income tax relief for buying new shares in qualifying companies, which makes your round easier to fill. According to GOV.UK guidance at the time of writing:
| SEIS | EIS | |
|---|---|---|
| Most you can raise | £250,000 in total | Up to £10 million in any 12 months (£24 million lifetime) for most companies |
| Company size | Gross assets up to £350,000; fewer than 25 full-time equivalent employees | Gross assets under £30 million before the share issue; fewer than 250 full-time equivalent employees |
| Company age | Trading for no more than 3 years | Within 7 years of your first commercial sale |
The rules change, so always check the current guidance for SEIS and EIS. Many angels expect you to have advance assurance from HMRC before they commit.
4. Get investment-ready
Investors look for evidence that you understand your market and can use their money well. Prepare:
- A pitch deck covering the problem, your solution, market, traction, business model, team and the raise.
- A financial model with your assumptions, monthly budget and how long the money lasts.
- A cap table showing who owns what today and after the round.
- Evidence of demand: customer interviews, pilots, sign-ups or revenue. See how to validate your startup idea.
- A tidy company: a limited company with up-to-date records at Companies House.
Our free resources include pitch deck, business plan and financial model templates, plus a fundraising guide.
5. Build your investor list and pitch
Research investors who back your sector and stage, and ask for warm introductions through advisers, customers and other founders. Angel networks such as the UK Business Angels Association can help you find them. Keep a simple tracker of who you've spoken to, their feedback and next steps, and give each investor a clear ask.
6. Agree terms and close the round
When an investor commits, you'll agree a term sheet covering the amount, valuation and key rights. After due diligence, a lawyer turns it into a shareholders' agreement and updated articles of association. Only when these are signed do you issue the shares, file the changes with Companies House and, for SEIS or EIS, complete the compliance statement so investors can claim their relief.
Common mistakes to avoid
- Starting to raise with only a few months of cash left.
- Issuing shares before SEIS or EIS paperwork is in place, which can cost investors their relief.
- Giving away too much equity in the first round.
- Signing a term sheet without legal advice.
Frequently asked questions
How much should I raise in my first round?
Raise enough to reach your next clear milestone, such as launch, first revenue or a proven sales channel, with a buffer. Build a simple month-by-month budget and add a contingency rather than picking a round number.
What are SEIS and EIS?
SEIS and EIS are UK government schemes that give investors income tax relief for buying new shares in qualifying early-stage companies. They make a round more attractive to UK angel investors. Check the current rules on GOV.UK before you apply.
Do I need SEIS or EIS advance assurance before raising?
It is optional, but many UK angel investors expect it. Advance assurance is HMRC's opinion that your company is likely to qualify, and you apply for it online before issuing shares.
Do I need a lawyer to raise investment?
Yes, for the legal documents. A lawyer should review the term sheet and draft or check the shareholders' agreement and updated articles of association before anyone signs or transfers money.
How Kollider can help
- Our startup incubation includes business plan development, mentoring and market research, with no equity taken.
- Book a free consultation to talk through your round.