This research provides a qualitative analysis of the efficacy of networks for entrepreneurs raising finance in the UK. The authors conducted interviews with eight entrepreneurs in North West England based on the three core components of entrepreneurial networks suggested by Hoang and Antoncic (2003)—contents, governance, and structure. It was found that, on the one hand, the importance of networks for entrepreneurs is widely acknowledged and entrepreneurs have a strong desire to get finance from investors with the help of entrepreneurial networks, while on the other hand, getting finance from networks is still dependent on ‘luck’ and it is quite hard to impress investors and gain funds from the network. The paper proposes a hypothesis for treating entrepreneurial networks as a kind of market for financing, and suggests constructive ways in which entrepreneurs can use networks to raise finance; and it also offers suggestions to improve network functions to help entrepreneurs gain funds.

One of the most important challenges for a new business is the imbalance between the internal needs of starting or expanding a business and the obstacle of getting funds from outside. As far back as the 1930s, Macmillan (1931) argued that it was extraordinarily difficult for start-up companies to obtain the required capital. This is a major challenge for many small business owners today. In other words, the challenge to the entrepreneur is how to gain funding in order to turn an innovative business idea into a reality.

The fund raising approaches available to entrepreneurs can generally be divided into three categories: banking systems, venture partners, and grants or ‘soft loans’ sponsored by government (Burns, 2007). Generally speaking, from the past data, approximately 10% of start-up businesses were sponsored by venture capital and almost 95% of small firms obtained funds from other sources, rather than venture partners. In terms of development of entrepreneurship in the UK, the Industrial Revolution resulted in the UK becoming one of the most economically powerful countries from the 19th century to the 1930s. Its capitalist economy boosted the efficiency of many industries, and early entrepreneurs performed a very important role in promoting entrepreneurial economic development. However, due to the huge debts incurred during the Second World War, the economy of Great Britain had to undergo an austerity and nationalization period (Tookey, 2001). From the Thatcher era onwards, the UK government implemented a series of policies to boost the economic recovery, such as privatization, deregulation, reform of industrial relations, and tax changes. Competition policy was emphasized instead of industrial policy (Crafts, 2002), and this has generally been agreed to be positive for entrepreneurial businesses. Given this background, innovation and entrepreneurship have been highly encouraged in the UK (Mason and Harrison, 2002). With the development of an entrepreneurial economy, the networks have changed and evolved according to the requirements of entrepreneurs (Jack et al., 2010).

Entrepreneurship Development Journal, Networks, Entrepreneurs, Raising Finance, Great Britain, good, Entrepreneur, Networking, Raise Funding, Qualitative Analysis.