Wealth & Finance International - February 2017

Wealth & Finance International 94 What Does 2017 Have in Store for SME Investment? n January, the Government launched its industrial strategy, outlining how it intends to help small businesses to scale up. This was followed on 2 February by the release of the Brexit white paper, which sets out the Government’s pre- ferred outcome in advance of the negotiations that will secure the UK’s departure from the European Union (EU). What already appears clear is that 2017 promises to be year of transition and opportunity as the UK implements and adapts to the landmark political and economic events from last year – namely Brexit, Trump and record low interest rates. In this climate, the robust levels of confidence among SMEs provide a cause for optimism. A recent survey of UK SMEs found that 82% are confident about their businesses’ performance in 2017. Even busi- nesses exporting into the EU remain confident, with over half expect- ing either no impact or even a positive outcome. Meanwhile, new IW Capital research has found that 6.62 million UK investors believe that entrepreneurs and private business leaders are and will continue to play a critical part in driving private sector growth this year. The crowdfunding sector in particular has witnessed an exciting new trajectory; the emergence of rising numbers of lead investors on crowdfunding platforms, opening the possibility that much higher levels of funding may become available to SMEs. These lead investors come in the form of high net worth, angel, seed or institutional investors who are able to energise a crowdfunding campaign by injecting momentum and confidence into the funding round through large, early donations. If their needs are accommodated by diligent platforms, these investors can provide support not just to new start-ups but also to proven SMEs with ambitious plans for expansion. This emerging trend could not come at a more exciting time for UK SMEs. Since last year’s Autumn Statement, the Government has unveiled the most ambitious set of SME initiatives in living memory. The rollout out of the Bank Referral Scheme in November set a course for this renewed focus by embracing alternative finance providers as a gov- ernment-mandated alternative to high street banks. New investments were also made in transport and digital infrastructure, and in SMEs themselves through local enterprise partnerships and venture capital funds via the British Business Bank. 2017 looks set to be the year of the scale-up. Britain’s remarkable record of start-up creation has given rise to an ambitious impulse to similarly raise the nation’s record of scale-up support. Indeed, while the UK ranks third in the OECD for start-up support, it trails behind in 13th for the number of SMEs that manage to successfully scale-up. The Government’s upcoming Patient Capital Review will seek to address the barriers currently preventing SMEs from accessing growth capital and will form the basis of a renewed effort to spread the benefits of crowd- funding and alternative finance to support entrepreneurship and growth nationwide. For the UK’s 5.5 million SMEs, access to funding will be the critical vehicle towards success and industry solutions like Crowdfind- ers’ Race to Scale initiative will be vital to facilitate investment into the most promising investment opportunities the nation has to offer. It is clear to see why the confidence levels of entrepreneurs and investors alike are increasingly robust; given the importance private investment and government initiatives have placed upon improving the nation’s growth capital infrastructure. 2017 may well be remembered as the year that Article 50 triggered Britain’s exit from the EU, but equally it will also be the year that the scale-up revolution truly arrived; taking the forefront of both government policy and private investment agendas. In light of this, we look to the coming year not only for the opportuni- ties that exist within the start-up economy but, with the expansion of the fast-moving alternative finance industry, to the rapid rise of a new category of investment opportunities within Britain’s thriving scale-up community. Name: Luke Davis, Co-founder of Crowdfinders and CEO of IW Capital Email: [email protected] Web Address: iwcapital.co.uk Address: 42 Bruton Place, London, W1J 6PA Telephone: +44(0)20 7015 2250 The start of the New Year has already brought with it some important developments for Britain’s SMEs explains Luke Davis, Co-founder of Crowdfinders and CEO of IW Capital in a guest article. I