5 Ways Entrepreneurs Can Use Startup Capital To Improve Their Business Strategy

May 19, 2022


Europe’s startup scene is ever changing post-pandemic. In a new digitally driven landscape, becoming an online entrepreneur has never been easier as remote working trends remain popular and the gig economy soars.

In fact, recent data from Ember revealed that just under 200,000 startup ventures were established in just the second quarter of 2021, a new record for the British corporate scene. With that number expected to double in 2022, the small business landscape is set for a complete transformation.

Europe’s startup success has only been mirrored by 2021 investment figures after $116 billion was invested into emerging business ventures across the continent. With a growth rate of 159% since the pandemic began, it’s no secret that the post-Covid corporate scene is booming.

As Unicorn numbers soar and technological evolution facilitates the business ventures of tomorrow, startup leaders are currently battling it out for both dilutive and non-dilutive capital investment. While the startup scene may be rich with new ideas, rising levels of competition have left new entrepreneurs working harder to reach funding round totals and VC investors spoilt for choice.

Read on as we tackle the challenges small businesses face post-pandemic and how company leaders can use startup capital to boost their growth strategy for industry success.

Exploring The Startup Scene Post-Pandemic

The startup scene has become increasingly competitive for newcomers post-pandemic. After the global e-commerce industry grew by a third in 2020 alone, Covid-19’s push for an online future has made starting a business both the easiest and hardest task for new entrepreneurs on the block.

From rising above the noise of social media promotion and branded giants to adapting to a new demanding demographic that requires hyper-personalisation, maintaining start-up growth takes both courage and capital if small business leaders want to see victory.

However, after breaking a start-up funding record in 2021, Europe’s startup scene has seen a rise in unicorn status startups despite the challenges posed by the pandemic and increased consumer competition.

In fact, following a technological boom and new access to a global consumer market, studies show that while 2012 data revealed that the average time it took for a company to progress from founding to unicorn status was four years, 2022 data tells us that a $1 billion valuation can be reached in just half the time.

This ‘unicorn boom’ has been fueled by a spike in global investment. As fintech developments, open startup funding to a global investor landscape, a rise in the popularity of digital payment facilitators, blockchain security and asset tokenisation have aided the expansion of Europe’s funding pool.


(Image Source: Statista)

As you can see here, the UK is currently home to the continent’s most unicorn stables, quickly followed by France and Germany.

December 2021, saw 36 unicorns thriving in the UK, however, in just Q1 of 2022, that number has now risen to 41 according to Tracxn, suggesting that Europe could see its unicorn numbers double by the end of the year.

Startup niches set to dominate the unicorn landscape range from fintech to AI, as both industries sit at the top of the post-pandemic tech wave.

“The rate of growth in the U.K. tech ecosystem in the last 10 years has been immense and we are confident that there is more to come,” claims chair of Tech Nation, Stephen Kelly. “The U.K. now has more ‘futurecorns’ than France and Germany combined, which demonstrates the extent to which the U.K. is leading Europe.”

The fintech market for example is predicted to reach $332.5 billion by 2028 according to the global newswire. After receiving 18% of all global capital funding in 2021, it’s clear that it will be a key player in the startup landscape across the next decade.

The question is, just how hard will it be for other small business niches to compete against trending tech startups in 2022? Let’s take a closer look at the capital funding options available and explore the steps entrepreneurs need to take in order to qualify for company investment in 2022. 

Which Startup Funding Option Is Best For You?

Startup funding is vital for small business success. Without sufficient capital, new entrepreneurs will struggle to compete with larger industry giants who have hefty marketing budgets, large scale productive workforces and a number of industry connections.

Startup funding gives new entrepreneurs a chance to bring their vision to life. Funding enables business leaders with strong venture plans to gain access to the capital that will enhance their growth period. 

When utilising capital funding, startup leaders are able to separate both business and personal expenses, reducing the need for the founder to dip into their personal savings.

All developmental stages of the startup process require funding and depending on the niche, nature and goals of the business, there are a number of capital funding options to pick from.

From dilutive forms of funding such as venture capital, in which investors award capital for a stake in the business, to non-dilutive alternatives such as crowdfunding that provide startups with capital for no equity in return, the startup funding landscape is rich with opportunities for entrepreneurs at all stages.

Let’s have a close look at some of the most popular startup funding options in 2022.

Venture Capital

Defined by Investopedia: “Venture capital (VC) is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions.”

Typically allocated to smaller startups that have considerable growth potential, venture capital is one of the most well-known funding sources across the globe. However, it comes with both advantages and disadvantages for the startup and the investor. 

VC based funding rose in the UK by 22% in 2021, after $32.9 billion was invested into startups across the country. Doubling year on year, investors continue to target emerging tech ventures, remote working visions and sustainably based clean tech.

Geek Wire

(Image Source: Geek Wire)

As you can see here global VC investment deals have risen too, multiplying as investors respond to the post-pandemic startup boom.

When working to acquire VC investment, startups must complete a series of funding rounds in order to prove they are expanding at an exponential rate that carries little risk for investor firms. VC investors look for companies with a long term growth potential and use their position as stakeholders within the business to guide budding entrepreneurs and influence future business goals using their strategy expertise. 

While a VC helping hand appears to be popular amongst a number of startup ventures such as Deliveroo, Monzo and Skype, entrepreneurs with a clear vision may shy away from inviting stakeholders in, as those who hold a stake, also hold a say in what direction the company will go in. 

Angel Investment

Angel investment is not so dissimilar to traditional venture capital funding. While VC investment is made up of pooled capital in a professionally managed fund, angel investors tend to be business-minded individuals who aim to invest their own capital into a business venture for a stake of the equity. 

While both VC and Angel funding are dilutive methods of startup capital raising, they are suited to different stages of the business life cycle. Angel investors tend to fill the space between personal finance and venture capital, therefore acting fairly early on in the startup journey. 

Angel investors are much happier to take a risk and invest in the early stages of business growth in order to gain more power over the business strategy and direction. Venture capitalists on the other hand search for established company plans, strong valuations and numerous funding rounds before throwing their hat into the ring.


For startups looking for a non-dilutive form of funding, crowdfunding could be the key to success. After 2021 saw the crowdfunding market expand at a rate of 11% CAGR, reaching a value of $12.27 billion, experts suggest that this capital raising method could rival VC funding in 2022.


(Image Source: Technavio)

Crowdfunding is a great way to raise funds without giving away equity in return. Instead, a large number of people pool together small investments that make up the capital needed to get a company venture off of the ground.

As an early stage investment strategy, both charities, companies and individuals can create a dynamic campaign for a cause or vision they believe in and ask for funding in return. While this method can carry more risk for both the investor and startup business, the CEO of WhoseYourLandlord, Ofo Ezeugwu, believes that crowdfunding will continue to be a trending investing method across the next decade.

“From an investor’s perspective, crowdfunding provides an easy way to fund projects and people that you genuinely believe in and care about. In addition, crowdfunding allows investors to invest small amounts in multiple ventures, thereby diversifying their portfolios and maximizing the chances of a big payout,” he comments. “While crowdfunding is a high-risk investment, where investors should only invest capital they are comfortable losing, hypothetically, all an investor really needs is one blockbuster investment to recoup other losses and realize a large return.”  

Business Loan

Business loans are also a very common source of startup capital. For business leaders that want to retain full control of their company’s direction, while still receiving a quick injection of finance, securing a business loan with a bank lender is a quick and easy way to keep a venture afloat.

There are a number of business loan types in the UK, ranging from short term loans to long term repayment schemes, that are either secured or unsecured. Depending on an entrepreneur’s credit score, and the sum of money they are requesting, business loans can be flexible and be adapted to business leaders’ own repayment schedules.

However, when securing a business loan, assets are lent to a company on an interest based repayment plan. While using a business loan to get a company off of the ground, leaders can often find themselves paying back larger sums, especially if payments are late.

Business lending in the UK fell to minus £1.6 billion in 2021 following Covid-19’s impact on company repayment. However, net growth is expected to rise in 2022, with the corporate industry predicted to borrow just shy of £11 billion.

5 Ways Entrepreneurs Can Use Startup Capital To Improve Their Business Strategy

Now we’ve covered the trending startup capital sources, it’s time to delve into how small businesses can use it to their advantage. 

From expanding the workforce to enhancing marketing efforts, there are a number of sources that require adequate funding in order for a company to see success in a post-pandemic e-commerce environment.

Whether you’re on your first funding round or simply looking for expansion tactics, here are the top five ways small business leaders can use startup capital to boost their growth strategy.

Improving Company Productivity

In order to see significant value production within a company, productivity needs to be at an all-time high. From increasing staff numbers to prioritising employee mental health, a large portion of your startup capital budget should be pumped into boosting productivity in the workplace.

Using equity investment to hire new staff members is an effective growth strategy. Expanding your team opens up opportunities for both knowledge and value add, in turn enhancing levels of company production and monthly profits as leaders utilise a larger pool of skilled workers.

Investing in company wellbeing also has large payoffs for business productivity. Prioritising HR teams, wellbeing workshops and a flexible working environment is more likely to result in a happy and healthy workforce, which according to The University of Oxford, is 13% more productive than an unhappy team.

Why not take employee wellbeing one step further and explore remote working options with your startup capital. Investing in a remote, digitally savvy work environment will not only save the small business utility based costs, but experts suggest that 77% of employees report greater levels of productivity in a WFH environment.

In fact, 64% of leading business owners claimed that flexible/remote working setups were their most beneficial investment in 2021, stating that they had a significant impact on productivity.

Enhancing Marketing Efforts

In a post-pandemic e-commerce environment being on top of your digital spending is key. With over half of all consumers now choosing to use mobile over desktop, your startup needs to be prepared to accommodate digital natives in a competitive market.

That is where digital marketing comes into play. With over 4.62 billion people on social media, content marketing, consumer insights and UX design have all become key factors of a successful business strategy in 2022.

In 2021, 46% of company leaders invested more money into their marketing budget, in comparison to just 12% increasing their marketing spend pre-pandemic. Using your startup capital to enhance your marketing efforts is a great way to improve your consumer engagement and interaction and in turn, increase sales leads and conversions.

As you can see below, the 2021 marketing budget allocation prioritised content marketing, revamping brand strategy and increasing sponsorships and influencer partnerships.

Web Strategies Inc

(Image Source: Web Strategies Inc)

However, recent data reveals that the most successful marketers spend the most money on their content marketing strategy (40%). In the wake of the popular social platform TikTok’s recent explosion, marketers are doing more to prioritise their social media content spending in order to attract a larger global demographic.

Utilising an effective marketing strategy to build brand awareness and authority is key in a post-covid digital age. In order to see significant online growth, startups need to be prepared to use their capital to capture an online audience.

Developing New Products/Services

The average venture capital investment stands at around $1.5-3 million per funding round. For startups that have decided to partner with VC firms, angel investors or any other source of dilutive funding, using these funds to collaborate with your investor and draw up plans for new product services is a great way to boost business growth.

For example, angel investors tend to be highly skilled and knowledgeable within the startup niche they have invested in, making them the perfect consulting partner when it comes to envisioning new product/service ideas.

Business growth in 2022 is all about adaptability. Adapting to the pandemic, digital commerce and an ever-changing consumer market. Demographic trends now change constantly, so startup entrepreneurs need to have capital set aside that can be used to modify product plans or tweak services to serve new consumer needs and gratifications.

We suggest that at least a quarter of startup capital funding should be poured into product/service innovation, as it is the quickest route to business expansion. 

Finding new gaps and angles within the sector is vital in 2022. Keeping a portion of startup capital aside to fund manufacturing and product and service planning will keep a startup on top of competitors and be able to act quickly on emerging business trends/opportunities.

Market Research & Consumer Insights

Market research is the key ingredient in a successful growth strategy. In order for business leaders to make decisions about the future of their company, these visions and growth innovations should be well researched and informed to guarantee success.

While many entrepreneurs want to simply splash their capital on constant innovation, product development and digitally savvy tech, one of the most important funding sources should be market and competitor research.

While prioritising a strategy that will not necessarily show an instant payoff can appear to be not favourable for some, investing capital into market research can enhance a business’s ability to quickly identify market and consumer trends, learn how to connect effectively with their demographic and most importantly identify multiple opportunities for growth.

One area in particular that requires a hefty amount of investment is customer insight research. Studies show that customer-centric businesses are 60% more profitable than startups that fail to acknowledge the needs and gratifications of their audience. Spending money on analytic tools and a specialised research team guarantees that a B2B or B2C business will put its best foot forward and strive past its competitors.  

Automating The Future

A recent report from McKinsey found that 45% of current paid positions in the corporate sector could be automated, saving a whopping $2 trillion annually in staff based costs.

With a return as large as that, one innovative sector startups should invest their capital in is the technology of the future. From fintech to artificial intelligence and big data, technological evolution is on the up post-pandemic and continues to streamline company procedures.


(Image Source: Finextra)

Over half of digital based startups aim to introduce at least one form of automation into their business strategy within the next year, after a whopping 35% of respondents in a recent Finextra survey claimed that blockchain was the key to the future.

In fact, small businesses that have already invested capital into automation have reported a 10% cut back in all overall costs and an 8% increase in profits and company growth. 

Are There Any Concerns?

Startup funding has become a vital asset for new business leaders on the block who want to accelerate their market growth. While gaining access to startup capital can be a game changer for a small business venture, investor/startup partnerships still carry a risk for both the entrepreneur and the capital holder. 

After recent data from Investopedia revealed that 90% of funded companies still struggle to make it to the initial public offering (IPO), both VC and Angel investors have raised the stakes in 2022, meaning that startup leaders will have to work harder to gain access to capital investment.

However, on the back of a successful year for both dilutive and non-dilutive funding, a capital rich future is in sight for new entrepreneurs willing to take the risk.

Written by Daglar Cizmeci
Investor, Founder and CEO with over 20 years’ industry experience in aviation, logistics, finance and tech. Chairman at ACT Airlines, myTechnic and Mesmerise VR. CEO at Red Carpet Capital and Eastern Harmony. Co-Founder of Marsfields, ARQ and Repeat App.

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