Young Entrepreneurs Lead the Way in Small Business Funding
Britain’s small business owners have secured more finance than ever before with under 35’s demonstrating a growing appetite for investment
UK small and medium enterprises are increasingly optimistic about future growth ambitions as the number of firms securing investment excels – up 44% from 26% in 2013 – the third annual Albion Growth Report has found.
The report, conducted by venture capital trust Albion Ventures with over 1,000 companies, found that small businesses ran by entrepreneurs aged 35 and under have the biggest appetite for investment.
29% of young business owners have attempted to raise finance opposed to 14% of entrepreneurs aged over 45.
However 15% of these young founders admitted they had failed to raise funding despite their attempts. Young entrepreneurs were also far more willing to admit that they would benefit from business mentoring (24% compared to 17% of those over 45).
The report also highlighted a shift in bank finance as more “companies are beginning to understand that they don’t have to go to the bank to find capital” – a trend which was also highlighted in reports by Funding Options and Asset Based Finance Association earlier in the week.
The research, unveiled at a breakfast conference in Westminster today by Albion Ventures managing partner Patrick Reeve and the Financial Times’ Giles Wilkes, also identified 13 key barriers to small business growth in 2015.
Red tape was ranked as the top obstacle (for a second year in a row), followed by finding talent, cashflow, regulatory change, reaching new markets, access to finance, management expertise, scale of management ambition, and finally finding unskilled staff.
In regards to small business confidence across different regions, Yorkshire and the South East had the highest proportion of businesses expecting growth at 66%, followed closely by the North East at 65% and London at 64%. Companies located in the East Anglia were the least optimistic at 55%, although this was up from 39% last year.
Albion Ventures’ Reeve, added:
“This year’s report is particularly encouraging as it shows that many of the current barriers to growth are problems of success rather than failure. Concerns about access to finance have given way to shortages of skilled staff and insufficient management expertise.
“While red tape remains as ever the biggest concern, what has emerged very clearly is a trend towards long term financing horizons and the growth of the equity culture.”