London is Europe’s premier destination for business funding. The city attracts 40% of all European venture capital investment and is home to a dense network of angel investors, government-backed lenders, and specialist grant programmes. Whether you are at the idea stage or preparing for a Series A, this guide covers every major funding route available to London entrepreneurs.
Government-Backed Funding
British Business Bank
The British Business Bank (british-business-bank.co.uk) is the UK’s national development bank and the central hub for government-backed business finance. It does not lend directly to businesses but works through accredited lenders and intermediaries. Key programmes include the Start Up Loans scheme, the Recovery Loan Scheme, and the British Patient Capital fund for growth businesses. The BBB’s Finance Hub is an excellent starting point for understanding what funding is available for your stage and sector.
Start Up Loans
A government-backed programme providing personal loans of £500 to £25,000 at a fixed 6% annual interest rate, with 1-5 year repayment terms. No personal guarantee required beyond the standard loan agreement. Crucially, each business partner can apply separately — a two-founder business could access up to £50,000 combined. Free mentoring is included. Apply via the British Business Bank’s website.
Innovate UK Grants
Innovate UK (innovateuk.ukri.org), part of UK Research and Innovation, funds innovative businesses through grants, loans, and competitions. Grant amounts range from £25,000 for early-stage projects to millions for collaborative R&D programmes. Unlike loans, grants do not need to be repaid. Key programmes include: Innovate UK Smart Grants (open competitions for any sector), Accelerated Knowledge Transfer programmes, and Global Business Innovation Programme for international market access.
UK Tax Incentive Schemes for Investors
The UK has two investor tax incentive schemes that are uniquely powerful for attracting early-stage funding — arguably the best such schemes in the world for startups.
SEIS (Seed Enterprise Investment Scheme)
SEIS allows investors in qualifying early-stage UK companies to claim 50% Income Tax relief on investments up to £200,000 per tax year. This means an investor putting in £100,000 gets £50,000 back from HMRC. Capital Gains Tax is also exempt on SEIS gains after 3 years. For founders, this makes it dramatically easier to attract angel investment — you are effectively offering investors a government subsidy on their risk. Businesses can raise up to £250,000 under SEIS.
EIS (Enterprise Investment Scheme)
EIS offers investors 30% Income Tax relief on investments up to £1 million per year (£2M for knowledge-intensive companies). Again, CGT is exempt on gains after 3 years. Companies can raise up to £12 million under EIS lifetime. EIS funding is the dominant mechanism for seed and Series A rounds in the London market — most serious angel syndicates and early-stage VCs expect EIS eligibility to be in place.
London-Specific Programmes
Mayor of London Business Programmes
The Greater London Authority (GLA) runs several business support and funding programmes specifically targeting London SMEs. These include the London Growth Hub (providing free business advice and signposting to funding), and sector-specific programmes in tech, creative industries, green economy, and social enterprise. The Mayor’s Office regularly launches new initiatives — check london.gov.uk/business for current programmes.
Local Enterprise Partnerships
London’s Local Enterprise Partnerships (LEPs) channel EU replacement funding and government regional development funds into London businesses. Growth hubs affiliated with LEPs offer free business advice and can connect you with relevant grant programmes.
Venture Capital in London
London’s VC ecosystem is the most developed in Europe. Key investors active at seed through growth stages include:
- Balderton Capital: Series A-B European specialist with offices in King’s Cross. Known for backing Yoox, Revolut, and Citymapper. Typically invests £5M-£50M.
- Accel London: European outpost of the US tier-1 VC. Backed Spotify, Supercell, and many UK founders. Series A specialist.
- Index Ventures: One of Europe’s most prestigious VC firms, with London as a primary base. Portfolio includes King, Transferwise (now Wise), and Just Eat.
- Atomico: Founded by Skype co-founder Niklas Zennstrom. A major backer of European tech businesses at Series B and beyond.
Angel Investment Networks
- London Business Angels (LBA): One of the UK’s oldest and most active angel networks. Members invest individually or in syndicates into early-stage businesses. EIS/SEIS eligible deals are preferred.
- Angel Investment Network: Online platform connecting entrepreneurs with angel investors globally. Strong London presence with thousands of active UK investors.
- Envestors: FCA-regulated investment platform specialising in EIS and SEIS investments. Good for first-time founders navigating the investor landscape.
Crowdfunding Platforms
- Crowdcube (crowdcube.com): UK-based equity crowdfunding platform. Allows businesses to raise from a community of retail and professional investors via EIS. Over £1 billion raised since launch. Good for consumer brands with strong communities.
- Seedrs (seedrs.com): Acquired by Republic in 2021 but still operating as Seedrs. Strong in tech and high-growth sectors. Offers portfolio management tools for repeat investors.
For more on structuring your business to attract investment, see our guide to taking your small business international. And for the tax side of your funding journey, see our London tax and financial services guide.
Find Your Funding Path
The SBA’s overview of small business funding programs provides a useful parallel framework for understanding how government-backed financing and investor incentives work across different markets. London’s funding landscape rewards founders who understand the options and move decisively. Join Hustler’s Library free to access the full London business guide and connect with founders who have raised successfully.
