A third of Tech City businesses are hindered by lack of capital

Tech Futures Report reveals growing gap for businesses requiring investment of £500,000 to £2m

Almost a third of Tech City business leaders believe that their company’s success is hindered by a lack of funding from private and institutional investors, according to recent research undertaken by GfK in conjunction with Grant Thornton.

The Tech Futures Report, which was presented at the Digital Shoreditch Festival yesterday, highlights a number of financial challenges that Tech City firms are currently facing.

Businesses are required to use an average of three sources of capital to initially fund their ventures, with the most popular finance including angel investors, venture capital and borrowing against personal assets, however many require additional capital for growth.

Although 43% of firms were revealed to have raised further finance, almost a quarter experienced difficulties from risk adverse investors or banks to lengthy waiting times. This lack of financial backing is argued to have led to redundancies within a fifth of Tech City firms.

Steve Leith, who heads up Grant Thornton’s early stage technology team, commented: “Many of the start-ups around Tech City may be early stage, but they are tackling complex funding requirements to fuel rapid expansion.

“Whilst there is an increasing flow of angel capital, we see a growing gap for businesses requiring investment of £500,000 to £2m.

“UK Government-supported initiatives such as SEIS relief, the MMC London Fund and GrowthAccelerator may prove part of the solution, but further innovative private sector capital structures will be needed to fulfil Tech City’s potential, and avoid a loss of talent and investment opportunities to the Silicon Valley dollar.”

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