Grants, debt, equity. Which one funds your next move?
Growth plans do not usually stall because founders lose ambition.
They stall because founders run out of money, or they run out of the right kind of money.
The two are not the same thing.
Across 40 years in finance, I have raised more than £120 million and completed over 30 transactions.
I have sat in boardrooms as the CFO of an AIM-listed company, stood in front of investors with a pitch deck, and watched many other founders do the same. Some well. Many less so.
What I have learned is this. There is rarely one right way to fund a business. There are several. The job of the founder is to choose the right one for the stage they are at.
The three routes that actually work
There are four main ways to bring money into a business.
Increase sales, secure a grant, borrow it, or sell a stake.
The first is the subject of a thousand other books. The other three are what I want to focus on here.
Each has a place. Each has a cost. And each rewards founders who understand what they are really signing up for.
Not sure which route suits your business?
Take the 3-minute Growth Readiness Assessment and find out.
Grant funding. The money that comes without strings
Grants are the cheapest capital on the market.
No repayment. No equity dilution. No loss of control.
But grants are not cheap in another sense. They come with compliance requirements, reporting obligations and narrow eligibility criteria. You have to fit the grantor’s definition of a worthy cause, and then prove you are spending the money on exactly what you said you would.
For the right business, at the right stage, pursuing the right grant, the economics are unbeatable.
For the wrong business, it is a six-month distraction with nothing at the end of it.
Grant funding tends to work best for businesses doing something genuinely new. Innovative technology. Research and development. Social or environmental impact.
If that describes you, it is worth a serious look.
If it does not, move on.
Debt funding. Borrowing without giving the business away
Debt is the second route, and it is the one most founders understand best.
Term loans. Asset finance. Invoice discounting. Growth capital from specialist lenders.
The appeal is straightforward. You borrow money, you pay it back with interest, and you retain every share of your company.
The catch is that lenders want predictability. They want to see a pattern of cash generation that gives them confidence you can service the debt. If your cash flow is lumpy, your reporting is patchy or your forecast is guesswork, debt becomes expensive. If it is available at all.
Debt also comes with covenants. Conditions on how the business is run, what it can spend, what it can distribute. Break them and the loan accelerates. Suddenly you owe the full amount, immediately.
Done well, debt is the cheapest form of growth capital you can get your hands on.
Done badly, it can put the business under.
Want to full framework behind each funding route?
The Add Then Multiply eBook walks you through every option in depth, with case studies and verified numbers from businesses that have done it.
Equity funding. Bringing partners in
Equity is the third route, and it is the one founders either romanticise or fear.
Angels. Venture capital. Private equity. Crowdfunding. Public markets.
Each works differently, but the core trade is the same. You sell a percentage of the company in return for capital. The investor now owns part of the business. They expect a return, they have rights, and they will want a say.
The upside is that equity is not repaid. If the business grows, everyone wins together. If it does not, no one chases you for the money.
The downside is dilution. The longer it takes to grow, the more equity you give away to keep going.
Equity is the right choice when the business needs significant capital, when the opportunity is large enough to justify dilution, and when the founder genuinely wants a partner rather than just a chequebook.
The founders who thrive on equity are the ones who choose their investors as carefully as they choose their co-founders.
So, which route is right?
It depends on three things.
Your stage. Early-stage businesses rarely qualify for debt. Growth-stage businesses often do. Grants sit on the edges of both.
Your readiness. Clean financials, a live forecast and a credible plan open doors in every direction. Without them, every door closes.
Your plan. What is the capital for? How will it be deployed? When will it be repaid, returned or reinvested? If you cannot answer these, you are not ready to talk to anyone.
Most founders want someone to tell them which route to pick.
The honest answer is that a combination of all three, sequenced correctly, is how most of the best-scaled businesses actually get funded.
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Funding is not a transaction. It is a foundation.
My FACE methodology starts with Fund deliberately.
Not because funding is the most exciting part of scaling a business, but because everything else depends on getting it right.
Without the right capital structure, acquisitions stall. Consolidation is underfunded. And when the exit eventually comes, it happens on the buyer’s terms rather than yours.
Funding is not just a transaction. It is the structural foundation on which every other stage of growth sits.
Get Fund right, and Acquire, Consolidate and Exit become possible.
Get Fund wrong, and the rest is academic.
Three questions to ask before you approach a lender or investor
Before you send the first email or request the first introduction, answer these honestly.
Can you produce clean, current management accounts within ten working days of month end?
Can you tell someone exactly what your cash position will be in twelve weeks’ time?
Can you articulate precisely what the funding will unlock, and why the business is better positioned to deliver that outcome now than it was twelve months ago?
If the answer to any of these is no, you are not ready to raise.
Not yet. But you can be.
That is the work. And it is entirely within your control.
Ready to find out where your business stands?
Take the 3-minute Growth Readiness Assessment and find out.
David B Horne
Founder of Add Then Multiply & Funding Focus
Add Then Multiply is a fractional finance and business scaling consultancy helping founder-led businesses at £1M–£10M+ to Fund, Acquire, Consolidate, and Exit.
