Access to funding a major hurdle for majority of UK entrepreneurs, data shows
More than half of entrepreneurs in the UK are struggling to fund the growth of their business, new data suggests.
According to the latest Fast Growth Tracker report, published today (December 18) by professional services giant EY, 51% of entrepreneurs say their biggest blocker to expansion is funding.
The Tracker, which interviewed 380 founders and executives around the country, also found that 66% are still hungry for capital. But that number has fallen since last year, when 77% were looking for funding.
Of those who wanted to raise funds, 81% were seeking a minimum investment of £5m and 19% up to £10m.
EY’s lead partner in the North for its Entrepreneur of the Year programme, Victoria Price, said: “Entrepreneurs are vital contributors to the UK economy, creating wealth and jobs in all corners of the country, fuelling inclusive growth.
“They have an unrivalled drive and ambition to expand and innovate.”
She continued: “With their positivity and ability to spot opportunities in challenging times, entrepreneurs will help to lead the way through the uncertainty that lies ahead.
“With such an important role to play in boosting confidence, it is important that we maintain a supportive environment in the UK that supports their expansion plans.”
EY’s research discovered that finding suitable investors remains an issue for many business owners, with more than one-third (37%) struggling to find a match for their company.
A large majority (75%) said they favoured traditional equity financing through venture capital firms, compared to crowdfunding, initial coin offerings (ICOs) and other new pools of capital.
Crowdfunding was found to be a more viable funding source than traditional bank financing, with 20% favouring the crowd and 19% their bank.
Entrepreneurs are also becoming less willing to look overseas for investment. During the last 12 months, the desire to target international investors slipped 10 percentage points among the entrepreneurs surveyed, dropping to 52%.
Victoria Price commented: “The good news is that there are more sources of capital available to fast-growth, entrepreneurial companies than ever before. In the last couple of years we have seen the number of funding options multiply, which has prompted some business owners to opt for a hybrid funding model – using crowdfunding to supplement venture or angel capital, for example.
“When it comes to funding, the main challenge for the entrepreneurial community is supporting start-ups with capital, in order for them to scaleup.”
She added: “Some investors seem unwilling to take the chance on businesses that are still in the seed stages of growth, perhaps because of the level of risk involved, but in reality they are often the ones that need it most.”