Why external funding could be the game-changer for business growth

It is a universal fact of business, that most owners are striving towards realising a successful, sustainable and profitable enterprise. Driven by hard work, determination and entrepreneurial spirit, a significant number of businesses are funded through personal savings, salary sacrifice and reinvested earnings.

Whilst this is a noble path, it can also limit how fast and how far a business can grow.

Research shows that angel investment and business lending have become a vital component of the business ecosystem, helping companies scale more quickly, more effectively and in a more sustainable way.

So, why aren’t more SMEs making the leap?

Professor Gillian Fleming, founder of Mint Ventures, explains, “Typically, a funding journey may start with family and friends, move to crowd funding and then, perhaps, founders may look towards angel investment, or if the business is revenue generating, access loans.

“If we could educate companies earlier to know all the funding options available they could access investment earlier, growing quicker and more sustainably, without the need for less appealing strategies such as salary sacrifice. Throughout my career I have spoken to many people who wish they’d realised earlier how much support could be made available through an investment route.”  Read Gillian’s full article here > 

Is your business ready for a funding journey?
You may be surprised to learn the answer could be yes.

SMEs are the backbone of the UK economy, yet many underinvest compared to larger firms. This represents a missed opportunity, not only for individual businesses, but for the wider economy through job creation, productivity gains, innovation and overall growth.

The 2024/25 British Business Bank (BBB) report shows that markets for smaller business finance in the UK have matured significantly over the past decade. There are now more diverse debt-finance providers than ever before giving small businesses a broader menu of funding options.  For high-growth and early-stage firms, equity finance can be the difference between slow incremental growth and real scale.

Looking towards 2026, the momentum behind Scotland’s angel market and the expanding pool of lenders herald a powerful opportunity for growth-minded businesses.

Angel Funding or Borrowing – What’s Right For You?

Angel and Equity Funding

Angel investments in Scotland remain financially strong with reports showing larger, higher-value deals over the 2023-24 period. While the rest of the UK saw a 15.1% drop in number of deals and a 2.5% fall in total investment value, Scotland bucked the trend to deliver growth.

• In 2023–24, the number of angel investments in Scotland was 91. Although this was down slightly from 94 the prior year, the total value of private capital committed increased to £106.4 million.
• More broadly, 2024 was a strong year for equity investment in Scottish smaller businesses. Total equity deals involving Scottish SMEs reached £507 million which was up 28.3% year-on-year.

• The 2024 Scottish market also saw a rise in high-value deals (above £10 million), particularly outside central hubs.

Debt Funding – Borrowing for the future

As well as angel investment, the broader funding infrastructure remains robust with the British Business Bank (BBB) lending around £62 billion to SMEs in 2024. This was the first time since 2020 that gross bank lending outpaced asset-finance growth, showing debt remains a viable and active route for growth funding.

Finlay Kerr from Raising Expert commented, “Small and medium-sized companies now have access to more flexible lenders and loan structures than ever whether through challenger banks, asset-finance providers, or schemes supported by the British Business Bank.

For businesses that may not suit high-risk equity or are further along their growth path, business lending remains a vital tool for investing in equipment, premises, Research & Development, or simply scaling employees and operations.

The wider benefits for Perth and Kinross

According to the BBB report, business investment helps deliver higher productivity, greater efficiency, innovation, expanded capacity and by extension, more jobs and higher living standards.

When this is considered at a local level, it helps create a more balanced, resilient economy where ambitious founders have real opportunities to scale, grow and contribute locally and nationally.

The Angel’s Share, developed by Perth and Kinross Council (PKC), is an economic development programme designed to support entrepreneurial expansion by connecting growth-ready enterprises with certified investors.

Based around three live pitching events each year, the programme supports entrepreneurs by providing high value expertise and coaching ahead of their presentation to the programme’s audience of certified investors. Find out more about this successful funding programme, including how to access their advice and mentoring to become investment ready.  The Angel's Share >

References and Data Sources

• Angel Capital Scotland. (2024). Scotland’s business angels hold steady in turbulent times. Read More >
• Scottish Financial News. (2025). Equity investment in Scotland’s smaller businesses bounces back. Read More >
• British Business Bank. (2025). Small Business Equity Tracker Report 2025. Download >
• British Business Bank. (2025). Small Business Finance Markets Report 2025. Download >
• Scottish Enterprise. Investing in Ambition: Scotland’s Risk Capital Market Benchmark Analysis 2024. Download >