Analyzing the key determinants of Investment decisions while setting up an entrepreneurial business in the United Kingdom

Abstract

Start-ups are essential in developing products in the United Kingdom’s economy by stimulating modernization and robust competition (Dr. Achibane & Jamal, 2018). Notwithstanding start-ups’ vast influence on British economic development, several challenges are coercing these promising ventures. Nearly 40% of UK start-up ventures fail due to obstacles regarding raising new capital in the seed stage (Philips, 2019). The capability to access finance is significant for a start-up regarding starting investment for the business, increasing growth development, and smoothing day-to-day business activities related to cash (Andreas Kuckertz, et al., 2020). This study will also focus on understanding the major constraints faced by entrepreneurial ventures in the United Kingdom while accessing the capital market during the starting phase. The starting stage of a firm refers to the pre-commercialization stage when there is no product to commercialize. In this stage business idea is tested for its viability. Capital needs to channel Research and Development, conduct market research, expand the efficient team, and so on (Hisrich, 2013). Therefore, this study aims to find out the important determinants of investment decisions during the starting stage of UK ventures. To conduct the research, data were collected by using primary and secondary sources. To gain primary data researcher used an online closed-ended questionnaire. The questionnaires were distributed to the innovators from the London region via emails or social media platforms. The convenience sampling technique was used to reach these 70 innovators, but 50 responses were received from those respondents. Findings show that most of the respondents identified that the majority of the lenders asked for business plans, guarantors, and professionally audited financial reports which are not easy to generate at the start-up stage by the entrepreneurs.