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How to Invest in Startups From the UK
Ruby Layram
22nd Jul 2025
Fancy yourself as the next Dragon from Dragons’ Den? Or maybe you just want your money to go somewhere exciting with the potential for high returns? Investing in startups can be risky, ye, but it can also be seriously rewarding. And the good news is, you don’t need to be a millionaire to get involved.
In this article, we’ll walk you through how to invest in startups from the UK, the routes you can take (from angel investing to startup funds), and the pros and cons you should consider before putting your cash into the next big thing.
Why Invest in Startups?
Startups are where the magic happens. They’re the birthplace of innovation, and some grow into global giants (just look at Monzo, Deliveroo, or Revolut). Getting in early gives you the chance to back a company before the rest of the world even knows it exists.
While the rewards can be massive, so can the risks. Most startups don’t make it, and it can take years before you see any return. But if you’ve got some cash you’re happy to tie up—and potentially lose, it can be a thrilling part of a well-diversified portfolio.
There are several ways that you can invest in startups in the UK 2025, here are a few of the most popular to consider.
Option 1: Become an Angel Investor
Angel investing means you invest your own money directly into early-stage companies in return for shares. It’s hands-on, exciting, and not just for the mega-rich.
How to get started:
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Join a platform: Websites like Angels Den, Seedrs, and Angel Investment Network make it possible to invest from as little as £10–£1000 into early-stage UK startups.
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Angel networks: If you’re serious, join a group like the UK Business Angels Association (UKBAA), which connects investors with vetted startups and offers training. These networks often require a larger investment!
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Do your due diligence: Look closely at the pitch deck, founding team, market potential, and how they plan to use the money. An exciting idea means nothing without solid foundations.
Pros:
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Get in early, potentially at the lowest valuation.
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Help shape the future of the business.
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Eligible for SEIS and EIS tax relief (more on that below!).
Cons:
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High risk of failure.
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Shares are illiquid (you can’t just sell them whenever you like!).
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It can take years to see a return, if at all.
Option 2: Invest Through a Venture Capital Trust (VCT)
VCTs are a brilliant option if you want startup exposure but prefer a more hands-off approach. A VCT is a publicly listed company that invests in a portfolio of early-stage UK businesses. You buy shares in the trust and, in return, get exposure to a professionally managed basket of high-potential companies.
Tax perks:
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30% income tax relief (if you hold the shares for 5 years).
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Tax-free dividends.
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No capital gains tax on any profits when you sell your shares.
Also read: A guide to tax-efficient investing in the UK
How to Invest:
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You can buy shares in a VCT via most investment platforms (like eToro, Interactive Investor, or Hargreaves Lansdown).
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You’ll usually need to invest a minimum of around £100.
Examples of VCTs:
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Octopus Titan VCT: invests in high-growth tech startups.
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Mobeus VCTs: a diversified mix of growth-stage companies.
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British Smaller Companies VCT: focused on established SMEs with growth potential.
Pros:
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Diversification: Your risk is spread across many startups.
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Tax incentives are very generous.
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Professional fund managers do the legwork.
Cons:
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Still risky, as you’re investing in early-stage companies.
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Dividends and performance vary.
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You can’t access your money easily, expect to hold it for 5+ years.
Option 3: Startup Investment Funds
There are now funds that focus specifically on startups and early-stage ventures. These act like VCTs but may not come with the same tax perks.
Popular options include:
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AngelList Venture Funds (via international access).
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Amadeus Early Stage EIS Fund (available to experienced investors who want to gain exposure to emerging tech companies).
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Crowdfunded venture funds: some platforms like Seedrs or Crowdcube, offer “funds” that pool your money into multiple startups at once.
These funds typically require a bit more capital to get started, but some now accept smaller investors.
A Little Bit About SEIS and EIS Tax Relief
One of the biggest perks of investing in UK startups is the generous tax relief available under the SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme).
What You Can Get:
- SEIS: Up to 50% income tax relief on investments up to £100,000.
- EIS: Up to 30% income tax relief on investments up to £1 million.
- Capital Gains Tax deferral and loss relief if the company fails.
Many startups raise money through these schemes, just make sure you confirm eligibility before you invest.
Some useful resources to read about tax:
- https://www.gov.uk/guidance/venture-capital-schemes-tax-relief-for-investors
- https://www.crowdcube.com/explore/investing/tax-relief
- https://www.growthcapitalventures.co.uk/insights/blog/what-tax-reliefs-are-available-when-investing-in-uk-startups
Top Tips for First-Time Startup Investors
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Start small: Don’t put all of your money on the lin! Treat startup investing like a high-risk hobby with the potential for big upside.
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Diversify: If you’re investing directly, spread your bets across several startups rather than going all in on one.
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Be patient: These are long-haul investments. It could be 5–10 years before you see any returns.
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Do your homework: Whether you’re investing through a platform or a VCT, make sure you understand the risks and the business models.
Should You Invest in Startups?
If you’ve got a solid financial foundation, enjoy the idea of supporting innovation, and you’re happy to lock your money away for a few years, startup investing could be an exciting part of your portfolio. Just go in with your eyes wide open, and don’t invest more than you can afford to lose.
FAQS
Is there a way to invest in startups?
Yes! You don’t need to be a Silicon Valley insider to back early-stage companies. Platforms like Seedrs, Crowdcube, and Angels Den let everyday investors buy shares in startups from as little as £10. There’s also the Enterprise Investment Scheme (EIS) in the UK, which gives generous tax relief to those who invest in qualifying startups.
How to turn $100 into $1000 investing?
There’s no guaranteed formula, and beware of anyone who says otherwise! The safest way is through long-term compounding. For example, if you invest $100 regularly into an index fund returning around 7% per year, it can grow into $1000 over time. Higher-risk routes (like crypto, penny stocks, or startups) can deliver fast returns, but they also carry a big risk of losing it all.
What is the 7% rule in investing?
The 7% rule often refers to the average long-term return of the stock market (after inflation). It’s based on historical data from the S&P 500, which has returned about 7% annually over the last century. Investors use this as a rule of thumb when estimating how quickly their money might double over time.
How to invest in startups in the UK?
UK investors can use crowdfunding sites like Seedrs and Crowdcube, or angel networks if they have more capital to put in. Another option is through venture capital trusts (VCTs), which are listed on the stock exchange and give you exposure to a basket of startups.
Many of these investments also qualify for EIS or SEIS tax relief, which can reduce the risk by giving you income tax relief and capital gains benefits.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice.
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I have found valuable your ideas about investing in startups and profiting from the next big project. You did a great job laying out the key considerations for investing in startups, from thorough research and due diligence to understanding the risks and potential rewards. Your focus on diversification and setting realistic expectations provides a balanced outlook for those looking to enter this exciting investment world. Your advice on networking, attending events, and seeking expert advice highlights the proactive steps investors can take to identify promising startups and build a solid investment portfolio. Great article. Thank you.