Three Fifths of Start-ups Have Tried and Failed to Secure Traditional Financial Investment

With raising investment online becoming an ever-increasingly popular option for entrepreneurs and investors, researchers at have conducted a study looking into how many start-ups in the UK are making the most of the funding opportunities available to them.

The team at Angels Den polled a total of 821 adults aged 18 and over for the purposes of the study. Each participant had been the individual behind at least one newly created start-up company within the past two years.

Individuals were initially asked to reveal how they managed to fund the bulk of their ventures, with the majority revealing that they used a combination of their own savings and some financial aid from family members or friends. A further 19% stated that they managed to successfully secure an approved loan from the bank.

When asked to reveal if they had tried to borrow money from banks in order to fund their start-ups only to be rejected, a total of 59 per cent of participants admitted that this had been the case for them. When asked to reveal all of the reasons why they felt they’d been unsuccessful securing a loan through a bank, the most popular answers emerged as follows:

1. Unrealistic financial predictions/growth plan – (32%)
2. Lack of business experience- (28%)
3. Existing personal debt – (21%)
4. Age- (16%)
5. Poor credit rating- (9%)

When the respondents who’d tried and failed to get a bank loan for their start-up were then asked to specify which category their businesses belonged to, it emerged that the start-ups most frequently turned down for bank loans included those primarily focused on online/technology, food/drink or health/fitness.

Bill Morrow, Co-Founder and Director at Angels Den commented on the findings: “Unfortunately, it is all too often the case these days that promising start-ups with an excellent service or product to promote fall at the last hurdle, whilst trying to secure traditional investment.”

He continued: “Here at Angels Den, we’re witnessing a number of start-up businesses turning to angel investors and online crowdfunding in order to secure investment. Not only is it a fantastic way of raising investment, it also gives you the chance to get some experienced and well connected business people on board.”