Better government support and venture funding needed to help scale-ups grow

Columnists | Economy & Politics | Funding

Business leaders believe that a lack of Government support, banks being unable to open up funding, and a shortage of venture funds, are key factors holding back the growth of businesses looking to scale up and expand.

In addition, the need for a greater array of regional funds and a more effective way of trading secondary private company shares needs to be addressed to improve the funding outlook for growth businesses.

These are the key findings resulting from a poll of several hundred CEOs, corporate executives, advisers, investors, and venture and private equity professionals, which took place yesterday at the 2018 finnCap Ambition Nation Summit in Central London.

Highlights

  • Some 36% would like to see more banks open up funding to SMEs, with 30% stating there need to be more venture funds to ensure growth businesses have the funding they require
  • Some 27% thought there should be better Government support for SMEs, while 16% said they wanted to see a better venture debt market
  • 13% said more efficient ways of trading secondary private company shares is needed, with 7% calling for improvement in listed market support for growth businesses
  • While 71% disagree that the IPO market is broken, a significant minority, 29% believe that it does need to be reformed
  • Around 32% believe that the key outcome from a shift to a ‘purpose’ economy will be improved productivity, with a further 29% predicting it will lead to more flexible working
  • Unsurprisingly 79% of respondents said they were using technology to transform their business while 29% said they were not using technology in this manner

Entrepreneurs need to consider all types of funding

Separate panels at the Summit addressed a number of issues central to the outlook for growth businesses. The first panel reviewed factors entrepreneurs need to consider when fundraising, with Jess Butcher, co-founder of leading augmented reality tech business Blippar cautioning entrepreneurs to ‘think clearly about what they want to do with the money they raise and to consider all types of funding.’ Derek Zissman, partner at Cavendish Corporate Finance thought the key was ‘planning and keeping the story very simple’ as well as ensuring you have ‘a great management team.’

Purpose is important

The second panel addressed the purpose economy. Ed Perry, co-founder of frozen and ready meals business COOK, thought the ‘strongest argument for purpose is clarity of vision’ and that its gives ‘companies a competitive advantage,’ with Renee Elliott, founder of Planet Organic adding that ‘measures should be built around purpose not only commercial factors.”

Blockchain presents biggest transformative challenge

How technology was transforming economies and businesses was the theme of the third panel. In the view of Birgitte Andersen, CEO & Co-Creator, The Big Innovation Centre, ‘blockchain will present on of the biggest transformative changes for tech and the data sector as well as for Government.’

She also believes that ‘although we have more incubators, the tech giants are growing market share, which presents a growth and finance challenge and we need better regulation of data platforms,’ while Oz Alashe MBE, CEO & Founder, cyber security firm CybSafe said that ‘tech challenger companies need to develop a clear purpose, find a problem to solve not the other way around.”

AIM still fit for purpose

The final panel of the day put the spotlight on AIM. While a clear majority of the audience felt that the AIM market was still serving growth businesses well, a significant minority disagreed and Chris Searle, a partner at accountants BDO thought that ‘AIM will endure in the long-term, however short term Brexit uncertainty is a challenge to the IPO market.’ Nicola Foulston, CEO of City law firm Rosenblatt, which is listed on AIM, said ‘there is a difficult adjustment to make when you go from being a founder and owner to a serving shareholder on AIM, but ultimately shareholders do need to share your original vision.’

I was delighted that so many senior executives from across business and financial services were able to attend this summit and contribute their views and opinions on how to improve the funding and expansion landscape for dynamic growth businesses, which contribute so much to our economy.

We established Ambition Nation to open up a dialogue between seasoned business leaders to showcase stories of ambition and success and articulate how they overcame their challenges, which I believe was achieved yesterday. I thank all of the delegates for their contributions to these important discussions, and I look forward to seeing Ambition Nation continue to keep this dialogue open and champion the interests of mid-sized businesses in the future.

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