November 2015

UK SMEs look abroad to grow

Travel, services and international business management concept with a globe and international flags of the world on white background.

According to a recent report by Albion Ventures, more than half of the UK’s SMEs will enter overseas markets in the next two years.

Outlined in, what is now, the third Albion Growth report, the findings reveal that medium-sized companies are more likely to expand internationally than small businesses. 77% of medium-sized companies expressed ambitions to expand operations overseas, while just 53% of small-sized companies followed suit.

In terms of sectors, it is the manufacturing sector that is ‘leading the way’ internationally. 75% of manufacturing businesses plan to enter new markets abroad, while marketing and advertising, and IT companies were the next keenest – with 68% and 56% expressing interest respectively.

Regionally speaking, the report found that small firms in London are the most likely to grow overseas by 2017. It also found that small businesses in Wales are the least likely to look abroad for growth opportunities.

“Given the EU’s continuing economic travails” says Patrick Reeve, managing partner at Albion Ventures, “it’s of little surprise that other overseas markets are proving more popular”.

“Breaking into new markets is easier said than done” he did, however, add, “and all too often small firms lack the necessary expertise to overcome established competitors”.

Birmingham leads the way in start-up ramp-up

Birmingham 2Birmingham is enjoying the largest increase in start-up companies, far outstripping all other major UK cities.

According to new research carried out by Bureau van Dijk’s FAME database, there has been a 95% increase in the number of start-ups launching in the city within the last financial year. During 2014/15 almost 13,000 companies were founded in the city, compared with 6,640 the previous year. That amounts to just under a staggering 96% growth rate.

Bristol was the second best performing region with a 83% growth rate, followed by Manchester (77%) and London (70%).

So why is Birmingham achieving such stellar growth?

In part it is due to the extensive support on offer for start-ups via the Growth Hub, which is run by the Greater Birmingham and Solihull LEP. The Hub provides a unified point of access for you start-ups looking for advice and support.

“We are attracting more enquiries about starting a company than any other topic” said Ian McLaughlan, Manager at Growth Hub. “It is clear that greater Birmingham is full of ambitious potential entrepreneurs that want to set up and grow a successful business. The economic strength of this region relies on new companies establishing secure and sustainable plans for growth”.

Challenger bank Atom secures £45m investment from Spanish BBVA

close up detail of hand droping coin in piggy bank money box

Neil Woodford’s challenger bank Atom has received backing from BBVA, Spain’s second largest lender.

The Durham-based digital-only retail banking service had previously raised two rounds of finance since it was founded in July 2013 – most recently securing £25m equity investment from CF Woodford Equity Income Fund, and other Business Angels.

Now, Spain’s second largest lender BBVA has invested £45m into Atom in exchange for a 29.5% equity stake.

Set-up by Anthony Thompson, former Metro Bank chairman, and Mark Mullen, First Direct chief executive, Atom has also announced plans to launch an app.

“We’re excited by BBVA’s decision to invest in Atom, an excitement that’s about more than money” said Mullen. “Don’t get me wrong, it’s a lot of money and of course the money is important,but it’s only one of the things we need to help us build our business. BBVA has lots of banking experience and they also have access to considerable financial and material resources.”

However, Mullen suggested that Atom’s enthusiasm about the deal with BBVA stemmed from a more simple, humanist place.

“They get what we are trying to achieve here in Atom…we really like their people”.

Deliveroo whets investor appetite

HamburgerDeliveroo, the app which brings a high-end approach to take-away night, has secured $100m to further drive expansion.

This latest funding round was led by DST Global, with contribution from co-investors Greenoaks Capital, Accel, Hummingbird Ventures, and Index Ventures. Deliveroo has now raised $200m to date and, since the beginning of 2015, has increased daily orders ten-fold.

Renowned for its more discerning menu, Deliveroo brings restaurant dining into the home. Founded in London just two years ago, the company launched today in Dubai, Hong Kong, Singapore, Melbourne, and Sydney. Speculation now abounds as to whether Deliveroo could become the UK’s next Unicorn.

“The Deliveroo team are dedicated to providing great food delivery experience for their customers, restaurant partners, and drivers”, said DST Global founder Yuri Milner. “We hope this new round will support their continued growth”.

‘Chinese cash not enough’, warns the Royal Institution of Chartered Surveyors

The Royal Institution of Chartered Surveyors (RICS) has warned the government that it cannot simply rely on Chinese investment to fund UK infrastructure projects.

Steel industry“The Chancellor is short-sighted if he believes Chinese cash alone will address our investment needs”, said Jeremy Blackburn, RIC’s Head of Policy. He added that 43% of surveyors are currently turning down approximately five contracts per year, because of a dearth of skilled UK workers. He also lamented the fact that too many smaller projects are being overlooked by investors.

Energy infrastructure and broadband programs need just as much investment as high-profile plans like Hinkley Point nuclear reactor, continued Blackburn – who also called for a central register of projects for private investors.

Other suggestions made by Blackburn, the RIC’s Head of Policy, included incentives – such as tax relief, and reduced national insurance contributions – for employers who employ and train construction workers.

Tech City UK launches free initiative to turn start-ups into scale ups

Government-backed Tech City UK has announced the launch of a new, free, scale-up programme. The programme will provide digital start-ups access to industry advise from European and US entrepreneurs.

The six-month programme has been named ‘Upscale’, and will support twenty five fast-growth start-ups in the digital sector. A series of workshops, mentoring and strategic advice, and in-house lectures will prepare start-ups for the challenges of scaling.

So far an impressive array of scale-up professionals have offered their expertise to the programme. The star-studded panel, which will work as ‘Scale Coaches’, includes Alex Chesterman, CEO of Zoopla, Doug Monro, co-founder of Adzuna, and Sarah Wood, co-founder of Unruly.

There are however certain requirements start-ups need if they wish to participate. Businesses must be based in the UK, have grown at least 40% month-on-month for the last three months, or have annual revenues of £500k if bootstrapped.

“Upscale facilitates the sharing of experience and ideas at the precise moment ambitious entrepreneurs need it most.” said Gerard Grech, CEO, Tech City UK. “The digital business-ecosystem is known for its desire to fail fast, learn and succeed.”

Banks to use Bitcoin tech blockchain next year

bitcoinIn a previous insight Bit of good news: Bitcoin currency hits a 2015 high we explored how Bitcoin has steadily been gaining speed. Indeed last month news broke that the digital currency registered its highest 2015 value.

Now, however, a report carried out by TABB research claims that banks could be integrating the tech underpinning the cryptocurrency Bitcoin into elements of their organisations as early as 2016.

Bitcoin utilises blockchain technology that permits transfer of financial assets over secure, encrypted networks. This, consequently, removes the need for any third-party intermediary – thereby saving time and costs.

TABB’s report alleges that blockchain solutions could be implemented into syndicated loans as early as the second quarter of 2016.

“Blockchain’s adoption across capital markets and for a range of use cases is a matter of ‘when, not if’” the report said. “Over the next 12 to 24 months we will see early adoption grow.”

3 Reasons SMEs need Business Intelligence

robot android women with lightFor young start-ups lacking an in-house IT team, the notion of investing in software systems might seem an unwarranted expense. However, Business Intelligence (BI) software has changed. Not only is it increasingly affordable and accessible, but it is also becoming an imperative tool to deliver that competitive edge.

There are three fundamental reasons why BI can help SMEs:

1. Technical advantage

Development in the Software-as-a-Service space has allowed organisations to reduce expenditure. By shifting the cost and maintenance issues of running an in-house network to an external service provider, companies are able to streamline without compromising on quality. What’s more, cloud-based BI affords young SMEs the flexibility required in early stages of company growth.

2. User-friendly

With more user-friendly and easy to navigate software, companies no longer need to embark on lengthy, and often expensive, in-house training schedules. Non-technical users can independently access data-analysis tools, rather than seeking out-of-house experts.

3. Financially feasible

BI platforms are now cheaper than ever before. Rather than a luxury, or a tool reserved for larger organisations, BI platforms are allowing SMEs to work effectively with a skeleton team – before they have the financial backing to scale-up.

Innovate UK: teaming up with India on Clean-tech, healthcare, and ICT

Innovate UK: teaming up with India on Clean-tech, healthcare, and ICT

Innovate UK yesterday opened an India-UK collaborative industrial research and development competition, which will focus on Clean-tech, healthcare, and ICT. Innovate UK and the Government of India will jointly invest up to £3.4m into research and projects that propose new commercial solutions to problems impacting the socio-economic growth and development of India.

The competition aims to bring together SMEs – as well as larger businesses – research organisations, and academics from both India and the UK for joint research into the development of innovative products. Collaboration involving both UK and Indian participants is imperative, whilst the lead partner in India must be a business. Academic institutions, hospitals, and R&D institutes based in India are encouraged to participate as co-investigators.

Innovate UK has stated that it expects UK projects to cost in the region of £350k-£400k, with a time expectancy of unto 24 months.

The deadline for applicants is at midday UK time on 20th April 2016.

For more information visit: www.innovateuk.gov.uk

Barclays shows allegiance to the start-up

Barclays is setting up a specialist-team as part of a wider drive to help accelerate the growth of digitally-focused start-ups in the UK. The bank has announced a team of 50 senior managers, who’s role it will be to concentrate on fast-growth companies – helping them to eventually IPO and float on the stock market.

“It’s imperative that the financial system in the UK is able to fully back brave entrepreneurs” said Ashok Vaswani, chief executive of Barclays Personal and Corporate Banking, “who create jobs and unlock new innovation”.

Barclays have appointed Richard Heggie, head of proposition and delivery for entrepreneurs at Barclays, as head of the team. An additional 13 specialist credit sanctioners will bolster the 50-strong team. The bank has also allotted £150m of debt funding to help grow tech-focussed businesses.

“We believe the industry needs to do more” said Mr Heggie, “to support this segment and the $1bn-plus companies of tomorrow”.

The bank has also hinted at plans to open-up its branches to young fast-growth companies as a base. This would promote collaboration, and allow start-ups to utilise the bank’s resources – such as 3D printers.