Start-ups across the UK and the Republic of Ireland are securing funding with ease, but struggle when deciding how best to use the money to grow the company.
In a survey of decision-makers at 250 start-ups, commissioned by spend and expense management platform Soldo, 70% said they found the funding process easy.
According to the research, Scotland is the best place to fund a start-up, with 93% finding the process easy.
Yorkshire and the Humber is the most difficult place to secure funding, with only 46%finding it easy.
This follows news that despite Brexit, investment in UK tech reached an all-time high in 2019, according to data from Tech Nation and Dealroom. However, start-ups are struggling to spend that money on growth, with some 95 percent of start-ups facing difficulties in making spending decisions.
More than one in four start-ups cited economic and political uncertainty as one of the biggest challenges in spending money on growing the business. A further 18% said they do not have the necessary financial insight to make spending decisions, and a quarter said that they are held back by personal fears around making the wrong spending decision.
Darren Upson, VP for Small Business at Soldo, said: “It’s great news that start-ups are finding it easy to secure funding. However, poor financial insight and inefficient internal processes are preventing them from spending it on growing the company.
“A lack of financial insight means start-ups are unable to overcome personal fears and make confident decisions in a turbulent political and economic time. Start-ups must trust employees with sufficient funds to invest in growing the company. Otherwise, they may find that their business stagnates in the critical years to come.
“Soldo’s technology empowers start-ups to spend in the right areas and its budgeting and control capabilities ensure their funding is working hard for the business.”
For those who struggled to secure investment, one of the biggest challenges was being able to provide investors with a financial forecast (35 percent). A further 29 percent struggled to secure investor meetings. Another problem was negotiating a good deal, with three in 10 saying that the deal terms were bad, or the investor wanted too much equity.
The majority of start-ups funded their business through a bank loan (44%), and 26% used an alternative loan provider. Bootstrapping is still one of the most popular methods for starting a business, with 40% of start-ups using personal savings to fund the company. Another 24% of start-ups opted for the VC route, while a fifth secured funding through an angel investor.