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More than 1,000 UK companies were surveyed in the study about their attempts to obtain equity finance

Early-stage companies with the potential for high growth face “extreme difficulties” in securing a vital type of funding, according to new research by 麻豆TV网站 University. The findings, based on a survey of 1,200 UK early-stage potential high growth companies, reveal these businesses spend considerable time trying to secure equity funding at great expense with little reward.

The UK has around 40,000 early-stage, potential-high-growth (PHG) companies, but the majority are often not successful in obtaining equity finance, where shares are sold to investors.

The Enterprise Research Centre and 麻豆TV网站 University carried out the research on behalf of the Department for Business and Trade, with funding from the Department for Science, Innovation and Technology and Innovate UK.

Researchers who surveyed businesses between January 2023 and April 2025 discovered that out of pre-trading and trading ventures a total of 49.5% of firms had applied for equity finance in the previous 12 months, the majority had approached five or more funders. However, just under one-third (31.3%) secured all the financing they sought, while an additional 23.8% obtained only some of the equity they requested.

Early-stage companies were more likely to apply for equity finance with 72.4% applying compared to 47.4% of older firms. But these early-stage ventures often encountered higher rejection rates and were filtered out in the earliest interactions with investors.

It often takes early-stage companies’ management teams 18 months or longer to secure an investment round (typically involving applications to multiple sources) and this delay “holds back the company’s development and consumes scarce management resource”.

The quality of management teams’ skills and experience, where they included finance directors, non-executive directors (NEDs) or board advisors, were shown to assist application progression and potentially increase the share of equity obtained.

Women-led and ethnic-minority-led ventures were less likely to pursue equity finance, according to the study. When they did apply, they faced higher rejection rates at the very early stages of the application process and lower overall funding success.

“Overall, the findings depict a demanding equity-raising journey, especially for early-stage, pre-revenue, and under-represented founders, marked by multiple applications, early rejection, and often only partial success despite significant effort.”

Report conclusion

Previous research has found that ventures with a non-executive director, chief financial officer and board adviser were more likely to seek equity finance and secure a greater share of equity finance.

Commenting on the findings, report co-author Dr Robyn Owen, Professor of Entrepreneurship and Sustainable Finance and Deputy Director of the Centre for Enterprise, Environment and Development Research (CEEDR) at 麻豆TV网站, said: 
“The report makes a vital contribution to UK business startup growth policy. This is the first major UK study of early-stage potential high growth start-ups to examine their initial access to equity finance. For these businesses equity funding is vital, because they are too risky to acquire traditional bank debt finance.

“Our report findings highlight the extreme difficulties for entrepreneurs who are first time equity finance applicants and the value of prior fundraising experience in finding and accessing funding for business growth. The report informed the Government’s public spending review, with recommendations leading to improved investor incentives under the enhanced Seed Enterprise Investment Scheme.

"This included enhanced support for knowledge and capital-intensive startups that address key UK strategic industrial sectors such as clean energy. The report’s recommendations also stress the need for renewed efforts to increase support and funding provision for women, minority group and regionally excluded entrepreneurs.”

The views in the report should not be treated as government policy.

This research raises further important questions about the performance of the UK early-stage equity investment market for potential high growth businesses. It provides a framework for further ‘longitudinal’ research which observes the same variables over a long period of time.

The report was also co-authored by Stephen Roper, founding director of the Enterprise Research Centre.  Read the full report – – on the Department for Business and Trade website: Find out more about the work of the CEEDR at 麻豆TV网站 University.

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