July 2011

Businesses still searching for grants

The recently-published “SME Finance Monitor” (all 123 pages of it) contained some very interesting statistics about where businesses are looking for funding. The most popular targets are (not surprisingly) the banks. But given that so many SMEs have their bank loans refused, where else do they look?

The biggest category is grants with 28% of businesses looking to this form of finance. That’s (coincidentally) exactly the same percentage as the percentage of grants that have closed during the past 12 months (see our recent research findings). Our view is that grants are still worthy of consideration but that businesses need to look seriously at other sources of funding as well.

Have you recently applied for a grant? What other sources of funding are you considering? Share your experience in the comments below.

Press release – BusinessFunding.co.uk flags funding opps as public sector cash dwindles

We’ve just put out the following Press Release…

[PRESSWIRE] London, England (25.07.11) — A major new service for businesses will go live on Wednesday allowing start-ups and SMEs to explore their finance and funding options quickly and easily, as new data shows public sector funding has dropped by a quarter…

Statistics from BusinessFunding.co.uk‘s database – which tracks over 1,000 UK business funding sources – show the number of public sector-backed funding sources available to companies has shrunk by at least a quarter in the last year alone, and the number of grant schemes has shrunk by a similarly large amount.

Its key finding is that of the 286 public sector-backed funds it was tracking a year ago, 80 (28.0%) have since closed, with the North West particularly badly hit (see Table 1).

Similarly, on grant funding: of the 250 grant funding sources tracked that were active a year ago, 64 (25.6%) have closed (see Table 2). Here, nationwide schemes and those targeted at the South have been relatively protected, whereas those targeted specifically at the Midlands have fared badly.

With spending cuts progressing apace across a wide variety of business funding sources, this trend looks set to continue.

The research extends across the gamut of the BusinessFunding.co.uk database, which tracks the activity of over 1,000 funding sources, including almost all of the major equity investor organisations (venture capital funds and business angel networks) and hundreds of business lenders (from general business loan providers to specialist providers like invoice discounters).

With the evident decline of public sector and grant funders, UK start-ups and SMEs must diversify the range of options they look to when seeking funding.

The good news is that a wide variety of less-well-known funding sources do exist, from specialists such as asset-backed lenders and business cash advancers and from more traditional equity investors. According to BusinessFunding.co.uk’s research, these equity investors have provided funding over £500m into UK companies so far this year.

The BusinessFunding.co.uk website aims to help those businesses looking for funding but unsure as to their options find funders who are prepared to assist them.

Stephen Bence, Founder and Director of BusinessFunding.co.uk, says: “We were often being asked to compile lists of properly-qualified funding sources for a particular project or company. We found these tasks incredibly time-consuming because the information could not be found in one place – not to mention the complexity of the funders’ eligibility criteria.

“This is our solution to that problem: a comprehensive and detailed database of funding sources coupled with an easy-to-use online tool to help direct businesses towards the sources of funding and finance that are most suitable for them”.

Launch partners for BusinessFunding.co.uk include: Baker Noel Chartered Accountants, the legal firm Vincent Sykes & Higham, the Public Relations firm Presswire and the digital search agency Red or Blue.

For more information, please see the BusinessFunding.co.uk media pack, available here.

Note: ‘Public sector funding’ refers here to funding which originates from the UK government, devolved governments, regional and local government (i.e. Regional Development Agencies, Local Authorities and County Councils) as well as some funding from the European Union. It refers to any funding that is, ultimately, taxpayer-backed.

Notes to Editors

1/. BusinessFunding.co.uk is the central resource for businesses seeking funding or finance to start, grow or survive the downturn.

2/. Founded by a team with in-depth experience of the UK funding landscape and the practicalities of funding, the new service is backed by 18 months of research to provide a comprehensive and practical website combining high-quality independent information and primary research on over 1,000 business funding sources. Smart tools help businesses discover suitable funders.

3/. BusinessFunding.co.uk’s monitoring of most UK-based investment and funding firms means it is able to derive detailed statistics on activity and trends.

Journalists may make enquiries about statistics collected from the sources of funding that BusinessFunding.co.uk tracks.

For all enquiries and interview requests, please contact:

Richard Powell
Presswire PR
Office:   +44 (0) 845 053 7156
Mobile: +44 (0) 778 680 6951
Fax:        +44 (0) 871 433 0534
Email:    richard.powell@presswire.com
Web:     http://www.presswire.com

ENDS

BusinessFunding.co.uk launches!

We’re pleased to announce that BusinessFunding.co.uk officially launches today! We’re the central resource for businesses seeking funding or finance to start up, expand or survive the downturn. With details of well over a thousand sources of business funding and finance (including equity investors, business loan providers, invoice factors and more), jargon-free information and some clever tools, we hope you’ll find the site extremely useful.

We hope we’ve ironed out any bugs, but if you spot anything or just have some feedback then please get in touch. And if you’re a provider or broker of business funding and would like to find out how you can be listed on BusinessFunding.co.uk, just drop us a line.

Thanks!
– The BusinessFunding.co.uk team

Unhappy with bank loans?

The first SME Business Finance Tool has recently been published, commissioned by the Business Finance Taskforce. This is a group that brings together leading banks and business groups. At a first glance it paints a pretty rosy picture of the relationship between banks and their small business customers – perhaps not surprising given the members of the commissioning body. Within the 123 pages packed full of statistics (a fun read…), we were struck by two in particular:

  1. Over a quarter of applicants for business loans were refused in 2011 compared to just one in 25 in 2007.
  2. Only just over half (53%) of SMEs were satisfied with the outcome of their application for a business loan.

That’s a lot of SMEs unable to get a business loan and even more that are not happy with the outcome of the process. Have you recently approached a bank for a business loan? Let us hear your experience in the comments below.

Alternative approaches

For many businesses considering funding, banks are the first port of call. But there are signs that SMEs are beginning to shun the banks and look towards lesser-known alternatives, such as invoice factoring and discounting. According to figures released by The Asset Based Finance Association (ABFA), debt secured against the debtors book (mostly invoice factoring and discounting) has grown at an astonishing rate of 11% over 2010, and some sub-sectors have done even better: for example, export finance had a year on year growth of 50% in Q1of 2011. Indeed, the rate of growth has been so significant that in 2010 the four largest factoring markets in the EU (UK, France, Italy and Germany), served more than 100,000 clients, most of whom were SMEs.

Invoice factoring and discounting is perhaps particularly appealing to businesses because it solves the age old problem of invoice settlement cash-flow issues – something which figures from the Federation of Small Businesses (FSB) shows can be a slow process. As such, it allows companies to make the most of their revenue without incurring a great deal of risk as a result of their borrowing. And with these types of funding available for everything from single invoices to the whole debtors book, it can be an incredibly flexible finance option for SMEs.

Of course, some companies will still prefer the familiarity of loans and others will stick to the traditional equity route. But even with regards to equity funding, companies are exploring new options, such as crowd funding. Only last week, the equity-based crowd-funding website Crowdcube announced its first successful fund-raising of £75k. So, if you’re feeling despondent about your ability to secure a loan or watching Dragons’ Den puts you off pitching to investors then why not take a look at the other options available to you? You might be surprised at how many alternatives are available!

Funders are in Residence

Getting to know funders is sometimes the biggest challenge for businesses, particularly those seeking equity investment from a venture capital fund or business angel. Sending a decent business plan by email might get you noticed but you really can’t beat the personal approach. So, the idea of a “Funder in Residence” is one we like very much. The idea is that a representative of a fund works in a location occupied by startups and small businesses. Those businesses can easily get feedback at the early stages and the Funder in Residence can keep an eye out for great investment opportunities. It’s a win-win situation.

So where can you find a Funder in Residence? Well, The South West Angel and Investor Network (SWAIN) have announced that from the 1st August 2011 they will be moving to the SETsquared Offices in Bristol to become Funder-in-residence. In addition SWAIN will be working with SETsquared to develop the SETsquared and SWAIN Technology Investor Network where SETsquared investors will be able to join with SWAIN investors for specifically technology focused events.

Commenting on the collaboration Philip Tellwright said, “SWAIN have enjoyed a long standing working relationship with SETsquared and now is the time to formalise our association. Sharing offices with young dynamic businesses will enable SWAIN to get closer to our target market and running technology specific events will have significant appeal to investors known to both SWAIN and SETsquared”. This sounds like a great idea to us!

European investors agree standard term sheet for start-ups

Finding an investor for your business is only the starting point. After the pitch comes the process of due diligence and negotiating terms and conditions. Quickly the joy of finding investment can turn into frustration as the cost and difficulty of the investment process begins to hit home. So the news that a group of leading European investors have agreed on two standard term sheets for start-ups is bound to be welcome news.

The organisers, Seedsummit, commented: “We hope these documents help bring coherence to the fragmentation of the European market. By bringing the players to reach a common agreement for the benefit of the entrepreneur we hope to save entrepreneurs time and money and to ensure that the limited funds they are raising are used for the most important thing: building products for their customers”.

The initiative has been backed by some of Europe’s leading early stage venture capital investors, including 360 Capital, Doughty Hanson Technology Ventures, Eden Ventures, Index, Nesta, Passion Capital and Wellington Partners.

Commenting on the term sheets, Toby Austin, one of the founders of BusinessFunding.co.uk, said: “This is an encouraging move. Simplifying, standardising and allowing advance sight of documents relating to investment rounds can only assist startups and small businesses in securing funding. It’s as much about education as time and cost saving. However, businesses must still ensure that they receive appropriate legal advice to ensure potentially expensive pitfalls are avoided”.

Undercover Boss meets the world of politics

The new series of Undercover Boss began yesterday on Channel 4. The programme sees high-flying executives going undercover in their
own businesses to ensure their companies are fighting fit. As well as being entertaining, the programme demonstrates how important it is for company owners to keep in touch with the day-to-day reality of their business through the eyes of staff and customers if they are to make the best decisions about its management.

Of course, it is not just business owners who can benefit from this kind of insight. Anybody who is in charge of policy making or who represents a group of people does well to try and understand what life is really like for those that they serve. So the new Business Buddy scheme, which sees MPs embark on a special work experience placement where they can learn about the realities of running a small business, is rightly receiving praise. Real Business, for example, describe it as a ‘great scheme’.

So far 100 MPs have signed up for the scheme but Business Minister, Mark Prisk, is urging more MPs to sign-up.

Mr Prisk said: “My contact with small businesses tells me that you will not only benefit from gaining a real understanding of the challenges business owners face and overcome each and every day, but that you will find the experience to be hugely enjoyable.”

We certainly think it sounds enjoyable. Cabinet Office Minister Oliver Letwin is lucky enough to be going to work in a pie shop. Makes us hungry just thinking about it!