Introduction to Funding
An inventor usually requires two kinds of funding, particularly if he or she intends to make or sell the invention rather than license it to a third party:
  • short term for recurring expenses such as raw materials, fuel, wages and professional services; and
  • long term for premises, tooling, patent applications and renewals, office equipment and vehicles.
The Business Link Finance and Grants Portal provides a good overview of the options for satisfying those options. The Business Link Information is supplemented by articles introducing the Institute of Chartered Accountants for England and Wales SME Funding Adviser Scheme.  Also useful is the 

Traditionally banks have provided short term funding by way of loans and overdrafts. Since September 2008 such facilities have been harder to obtain. For those who find difficulty in borrowing from banks community development finance institutions ("CDFI") can often help. See the "Loans and Other Facilities page of this website for further information.

Although some grants are still available, longer term funding usually requires equity investment. The Business Link website provides some good basic information on equity finance. Useful pages to read in that section are "What is equity finance and is it right for your business?" and "sources of Equity Finance".

Although some CDFI such as the Business Enterprise Fund provide equity funding most investments of this kind will come from angels or private equity investors who specialize in early stage investment known as venture capitalists ("VC"). Investments of between £10,000 and £750,000 are available from business angels. Sums over £2 million available from VCs.

Business Link has identified a gap between the funding that can be provided by business angels and that provided by VCs which it calls "the equity gap". The previous government sought to fill that gap by establishing "enterprise capital funds" which are intended to fill that gap.

The Department for Business Innovation and Skills has recently published a green paper on business funding called "Financing a Private Sector Recovery" (CM 7923) in July 2010. The deadline for responses was 20 September 2010.