Please note: The panellist opinions in this article do not constitute formal advice. Please contact your private banker or wealth manager if you’d like any more information on the topics.
Newly-formed British businesses are crucial to the UK’s economic health but face an acute funding shortfall, Coutts clients heard at a recent event.
As equity specialist Henry Whorwood told the audience, the number of start-ups getting underway and the amount invested “fell off a cliff” this year, as the world came to grips with coronavirus.
The Head of Research and Consultancy at Beauhurst, which helps investors find suitable companies to support, said “some deals were tabled, some were postponed, some will never happen”.
He also said activity had picked up a little since, but added, “The area where it hasn’t picked up enough is first time fund raising. For all the investors with capital to invest, if you don’t support companies at that early stage, you’ve got no pipeline for later stage investments.”
Andy Gregory, Head of Investments, UK and Ireland at the Business Growth Fund (BGF), said it was critical such businesses received more capital. He told our virtual client event – Innovation in UK Enterprise – that this was “a growth economy”.
“Generally, these companies are outperforming GDP in a huge way,” he explained. “Employment growth in them is about 30% over the last couple of decades, versus four per cent in larger companies. And yet there is a funding gap, particularly for entrepreneurs who do not want to cede control but are passionate about growing their businesses.”