Startup funding pricing models: a comparison framework

What to take away

Use one scope, amount and period to compare startup funding pricing models.
Adviser fees come as fixed, hourly, subscription, success fee or hybrid, and the success fee plus its tail sets the real cost.
Debt cost is the rate plus fees, security, guarantees and settlement terms, not the rate alone.
Equity cost is the shares and rights issued plus cash fees; SEIS and EIS relief changes what investors will pay.
A grant pays a contribution in arrears, so model the spend, the claim gap and the excluded work.

Adviser fees in England

Most adviser quotes reduce to five shapes. A fixed fee buys a stated deliverable and revision count. An hourly rate prices named people. A subscription rents access. A success fee pays on a defined result, and a hybrid stacks an upfront charge on a later one.

Ask for VAT and expense treatment, and ask whether the adviser earns commission from a lender, investor or platform. Our guide to comparing funding suppliers like for like sets out the regulatory and fee questions that belong beside the price.

Two clauses decide a success fee. One is the earning event. The other is the tail that outlives termination, which can charge you for an investor first met during the engagement. Fix both in writing.

Debt pricing on one borrowing date

Interest is one line of the cost. Record the cash advanced, any fee deducted at drawdown, repayment frequency, total scheduled repayment, security, personal guarantee, early settlement terms and default interest.

Use the same borrowing date and period for each lender, and name a personal guarantee separately from a debenture. The Start Up Loan scheme shows a clean published shape: loans of £500 to £25,000 per founder, a fixed annual rate and repayment over one to five years.

Debt pricing record

Cash advanced
Fees deducted
Repayment frequency
Total scheduled repayment
Security and personal guarantee
Early settlement and default

Equity pricing, relief and dilution

Equity carries no scheduled interest. The price sits in the shares and rights you issue. Model founder and employee ownership after the new shares, the option pool and any conversion, then repeat it for a later round.

Tax relief changes what an investor will pay. SEIS offers investors 50% income tax relief on qualifying shares, subject to statutory conditions. The Enterprise Investment Scheme guidance covers EIS eligibility and reliefs.

Add cash fees for legal, tax, accounting, platform and diligence work, and note whether investor costs are deducted from proceeds. Equity crowdfunding platforms are authorised and their promotions must meet FCA rules; the FCA crowdfunding page explains the risks.

Grant economics and the claim gap

A grant is not a fee. The scheme pays a percentage of eligible costs, usually in arrears, and refuses work outside the agreed scope. A £120,000 award against £200,000 of spend still leaves £80,000 to fund yourself (illustrative).

Grant specialists often charge a fixed fee plus a success fee on the award. Our startup funding agency reviews compare GrantTree, TBAT and Granted on fee shape and service scope.

Search Find a Grant for live schemes, then read the agreement, not the directory headline, for the contribution rate and evidence rules.

Grant economics modelling

Use the live scheme to model contribution
Model claim timing and carry of spend
Absorb excluded work
Check evidence and audit requirements
Ignore directory headline if agreement is more precise

Example: one raise priced four ways

These illustrative figures model the same £150,000 raise over 18 months. They are not quoted rates.

One raise priced four ways

Cash received

Bank term loan at 9% a year, five years: £150,000
Start Up Loan of £25,000 at 8% a year: £25,000
SEIS and EIS equity: £150,000
Grant at 60% of £200,000 eligible spend: £120,000 in arrears

Cash cost

Bank term loan at 9% a year, five years: £2,000 fees
Start Up Loan of £25,000 at 8% a year: none assumed
SEIS and EIS equity: £11,000 legal and platform
Grant at 60% of £200,000 eligible spend: £3,000 plus 5% success fee

Outcome-linked cost

Bank term loan at 9% a year, five years: £67,500 interest
Start Up Loan of £25,000 at 8% a year: £10,000 interest
SEIS and EIS equity: none scheduled
Grant at 60% of £200,000 eligible spend: claim timing and audit

Rights or security given up

Bank term loan at 9% a year, five years: debenture or guarantee
Start Up Loan of £25,000 at 8% a year: personal liability
SEIS and EIS equity: 20% of shares
Grant at 60% of £200,000 eligible spend: none, if spend qualifies

On these figures the equity route costs £11,000 in cash and 20% of the company; a £3m sale would transfer £600,000 (illustrative arithmetic).

One raise priced four ways

Fix the scope, amount and period before collecting quotes.
List every cash itemfees, VAT, expenses and drawdown deductions.
Add a delay case where funding closes six months late, inside a tail.
Show gross funding, deductions, net cash and monthly payments on one page.

Our startup funding budget template carries dilution, delay and fallback costs through that same model.

Common questions

What is the real cost of a debt offer?

Add interest to arrangement fees, guarantee exposure and settlement terms, then compare total repayment over one borrowing date and period. A headline rate alone hides the burden.

How do I price an equity round?

Value the shares and rights issued, add legal, platform and diligence fees, and model the cap table after options and conversion. Run one later-round case, because an anti-dilution clause can change the answer.

Are grant success fees worth paying?

Weigh the fee against the award and the claim work the adviser does. A 5% fee on a £120,000 award is £6,000 (illustrative), which only pays if the application succeeds where yours would not.

What should I check before signing?

Check the earning event for any success fee, the tail length, who approves extra work, and whether a lender or platform pays the adviser. Confirm worked examples in writing.