First Funding Round Prep Guide for UK Startups

Table of Contents

Who should read this?

UK startup founders and co-founders nearing their first equity funding round, especially those without prior experience in company structuring or investor relations.

This guide provides actionable steps on incorporation, cap tables, legal prep, pitch materials, and tax incentives, helping you avoid pitfalls and close rounds faster on better terms.

Key Takeaways

Incorporate early via IN01 when committed to a viable idea, with simple 100 Ordinary shares structure.
Ensure Companies House filings and cap table are accurate and up-to-date before approaching investors.
Conduct a share split to at least 100,000 shares using SH02 form for easier investment math.
Prepare key legal documents like IP assignments, founder agreements, and vesting contracts.
Optimize pitch deck highlighting SEIS/EIS relief and target right investors like angels or syndicates.

Preparing for your first funding round is one of the biggest milestones for any UK startup. Getting it right means more than just finding investors. You need your company structure, filings, legal agreements, and pitch materials in proper order before you start approaching anyone for money. Founders who prepare thoroughly are far more likely to close a round quickly and on good terms. Rushing in without the basics covered can delay your raise, put off investors, or create legal headaches down the line. This guide walks you through the key steps to get investment-ready ahead of your first funding round.

Incorporate Your Company at the Right Time

If you have not already done so, you will need to incorporate a limited company before raising equity financing. Incorporation is straightforward. You apply for a certificate of incorporation by submitting an IN01 form to Companies House, which can be done online.

The right time to incorporate your company is when you have settled on a viable idea and started building a real product or service. Do not rush to incorporate before you are committed, but equally, do not leave it too late. Investors expect to see an incorporated company with a clear legal structure.

Structure Your Shareholding from the Start

When you incorporate, keep your share structure simple. Most early-stage companies incorporate with 100 Ordinary shares at a nominal value of £0.01 each, giving a total share capital of £1. This makes it easy to split ownership between co-founders from day one.

Stick with a single class of Ordinary shares at this stage. Investors prefer a clean share class structure. You can always add additional share classes later if you set up an share-option-scheme or take on different types of investment.

Get Your Cap Table and Companies House Filings in Order

Before approaching investors, make sure your Companies House filings are fully up to date. Incoming investors will review your filing history and cap table to get a true picture of your shareholding. Any gaps or inconsistencies will raise concerns.

Your cap table should accurately reflect every share that has been issued, transferred, or allocated. If you plan to issue shares or allocate options to team members before the round, be aware that issuing shares at nominal value close to a funding round can be treated as a taxable event by HMRC. Consider offering share options to non-founding team members instead.

Do a Share Split Before Your First Funding Round

You should aim to have at least 100,000 shares on your cap table before your first funding round. This keeps the price per share manageable and makes investor percentages easier to calculate. Fractional shares do not exist, so a low total share count forces investors away from their target investment amount.

A share split (also called a subdivision) divides your existing shares into a larger number without changing the total share capital. Under section 618 of the Companies Act 2006, a share split requires an ordinary resolution from shareholders and must be filed with Companies House using form SH02.

For example, if your company is valued at £300,000 and you have 1,000 shares, the price per share is £300. An investor putting in £10,000 cannot hit that figure exactly. After a share split to 100,000 shares, the price per share drops to £3, making the maths much simpler.

Put Key Legal Agreements in Place

Investors will expect to see that you have formalised the key relationships within your company before they commit. The documents you should have ready include:

Founder agreements or service agreements between all co-founders
IP assignment agreements so the company owns all relevant intellectual property
Employment contracts with vesting schedules for key team members
Advisor agreements for any external advisors with equity arrangements
Non-disclosure agreements where needed

Getting these sorted early shows investors that you take governance seriously and reduces the risk of disputes later.

Author's tip: IP assignment is one of the most commonly overlooked documents. If a founder or contractor built key technology before incorporation, you need a formal assignment to transfer ownership to the company. Without it, investors may walk away.

Find the Right Investors for Your First Funding Round

The type of investor you approach depends on how much you are raising and how far along your business is. At the earliest stage, friends and family may invest between £1,000 and £20,000 each. Angel investors typically invest between £10,000 and £150,000 and may want an advisory or board seat.

For larger rounds, syndicates and funds may invest between £150,000 and £500,000. Venture capital firms typically come in at £500,000 or more and will usually require a board seat and more detailed commercial terms.

Setting up a company ahead of your first funding round? Our Company Formation packages help you incorporate quickly with the right structure from the start.

Optimise Your Pitch Deck

Your pitch deck is your first impression with investors. It should be clear, concise, and cover all the key areas they expect to see. Be ready to answer follow-up questions on growth plans, financial projections, IP ownership, founder vesting schedules, and your cap table.

If your company qualifies for SEIS or EIS tax relief, make this prominent in your materials. Tax relief is a significant incentive for early-stage investors and can be a deciding factor.

Understand SEIS and EIS Tax Relief

The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) offer generous tax relief to investors who back qualifying UK companies. SEIS provides 50% income tax relief on investments up to £200,000 per investor per tax year. EIS provides 30% relief on investments up to £1 million, rising to £2 million if at least £1 million is invested in knowledge-intensive companies.

Applying for SEIS or EIS Advance Assurance before your round gives investors confidence that they will receive the expected tax benefits. You can apply to HMRC once your company is incorporated.

Getting Investment-Ready

Raising your first funding round takes preparation, but every step you complete in advance makes the process smoother and faster. A clean cap table, solid legal foundations, and a compelling pitch give you the best chance of closing on the terms you want. If you need a professional registered office address while getting your company set up, a Service Address product keeps your personal details off the public register from just £26.00 per year.

About the Author:

Connect:

Stuart Connolly is a corporate barrister in Ireland and the UK since 2012.

He spent over a decade at Ireland's top law firms including Arthur Cox & William Fry.

Fundraising

March 2026

How to Prepare for Your First Funding Round: A UK Startup Guide

Key Takeaways

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Share Warrants in Irish Startups

What Actually Happens at an Investment Round Closing

What Is a Bridge Round and When to Use It

What Is a Cap Table and Why It Matters

SAFE vs convertible note: Complete guide for Irish startups

Dilution explained: What happens when you issue new shares

How to Raise Before a Funding Round in the UK

Venture debt explained: Complete guide for VC-backed startups

Frequently Asked Questions

What is the right time to incorporate a company for a funding round?

Why perform a share split before your first funding round?

What key legal agreements should be in place?

What are SEIS and EIS tax reliefs for investors?

How to initially structure shareholding?

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