THE owners of many fast growing businesses are looking overseas for growth capital after struggling to find suitable UK-based investors, according to a new report.
The findings of the study from professional services firm EY indicates that many ambitious firms in the North of England want to see new routes to secure funding in the UK. An estimated 84 per cent of entrepreneurs across the UK aim to fundraise up to £10m each over the next 12 months, according to the report from EY, which has been released today.
The EY Fast Growth Tracker interviewed 371 business owners about their fundraising and exit plans.
It found that funding remains the biggest hurdle to British business success, with 50 per cent of business owners who were quizzed as part of the survey describing it as the largest constraint on their growth.
Around 61 per cent of the owners surveyed had completed a funding round in the past 12 months. However, 40 per cent of respondents said this process had proved to be a distraction to running their business.
An EY spokesman said: “This has not stopped UK entrepreneurs from being hungry for capital, however, and 72 per cent of those wanting to fundraise in the next year are looking for up to £5m in capital, with a further one in six (17 per cent) wanting to raise over £10m.”
Alumni from EY’s Entrepreneur of the Year programme also took part in the survey. The programme, which brings together fast-growth business leaders from across the UK to network and share insights, aims to highlight and celebrate the role entrepreneurs play in helping the UK economy grow. The programme will celebrate its 20th anniversary next year.
Victoria Price, EY’s entrepreneur of the year lead partner in the North, said: “Entrepreneurs, with their innovative and optimistic outlook, will help to lead the way for UK business.
“In a rapidly changing world, where others see barriers, entrepreneurs will often see opportunity.
“Other businesses can learn a great deal from their ‘can-do’ attitude, passion and sense of purpose, which contributes to their fast-growth and ambitious plans for the future.”
More than half of the businesses surveyed (55 per cent) expect to grow their revenue by 50 per cent or more in the coming year, with another one in five (19 per cent) expecting a minimum increase of 20 per cent.
Technology entrepreneurs are the most ambitious when it comes to their growth, with two thirds (65 per cent) expecting to increase their revenues by 50 per cent or more in the next twelve months.
The EY spokesman said: “Business owners are not looking to UK-based venture capital to fund this growth.
“A majority (62 per cent) are targeting overseas investors, perhaps driven by the fact that over a third (39 per cent) were unable to find suitable investors in their previous funding round.”
Ms Price said: “Funding has historically been, and continues to be, a hurdle to growth for the country’s entrepreneurial businesses.
“This research shows a disparity between matching ambitious enterprises with suitable investors, leading many to look overseas to find the growth capital they need.”
She added: “To make our Northern start-ups a British business success, more routes to funding need to be created to ensure that these bright, entrepreneurial businesses are enabled to flourish.”
Two Yorkshire business leaders were awarded EY Entrepreneur of the Year titles last month after competing with some of the UK’s leading companies.
Di Walker, of Karro Food Group, claimed the UK Transformational Leader title while Debbie Bestwick MBE, of Team17 Digital, was a winner in the Disruptor category of the EY awards.
Malton-based Karro Food Group is one of the UK’s leading suppliers of pork products into the retail, foodservice and export markets. Walker played a pivotal role in the transformation of the business through a difficult period, transitioning the business from loss to profit and rescuing more than 1,000 jobs in the process. Founded in 1990, Wakefield-based Team17 Digital is an award-winning international games label that hosts the Worms franchise, Yooka-Laylee, The Escapists, and others.
Alastair Nuttall, EY partner and Entrepreneur Of The Year leader in Yorkshire, said last month: “It is fantastic to see Yorkshire represented in our list of national winners, by such impressive female business leaders.”