roundtable 100GROWTH THAMES VALLEY SME TM


The Business Magazine hosted this SME100 Growth Index roundtable, sponsored by Spectrum Corporate Finance and VitalSix, to help discover .....


The funding difficulties that still hamper SME growth


Participants


Adrian Braine: Entrepreneur in residence, SETsquared Partnership


Jonathan Caswell: Investment director, LDC


Pete Doyle: Founder and CEO, Social Retail Group


Susan Elliott: MD and co-founder, VitalSix


David Griffiths: CEO, Fiscal Technologies


Jonathan Hughes: Regional sales director, Leumi ABL


Lined up to debate: the Roundtable team Journalist John Burbedge reports the roundtable highlights


A baffling and frustrating funding maze ...


While the corporate finance (CF) and investment partners at the roundtable – Jonathan Caswell, Jonathan Hughes, Ian Milne, Alex Snodgrass and Simon White – all tend to deal with established companies and look to write debt or equity funding in the multi-millions, this debate quickly revealed that the region’s fledgling SMEs still face difficulties in raising development capital to help them grow.


And, even though the choice of funders is now greater than ever, many SMEs remain baffled and frustrated by the funding maze.


... with an all too obvious gap


Bank loans, asset-based lending (ABL), private equity (PE), venture capital (VC), invoice financing, peer-to-peer and crowdfunding all came under the


roundtable spotlight, but one vital gap was exposed – funding up to £5 million for small but growing companies.


White of Altitude Partners disagreed that the gap was not being addressed. He said: “The funding gap is why Altitude was set up and we only fund £1m-4m amounts, so we do answer the issue.”


Entrepreneurial drive generally gets new businesses started through a mix of self- funding and loans from family or friends. Keeping the business going and growing is the difficulty.


This development funding gap is not created by lack of finance – world markets are awash with cash – but lack of investor confidence. Fledgling companies, by nature, usually lack proven products and performance, the security of assets, or long- term contracts – their risks of a return on investment are much higher.


“There are any number of lenders around, but they want security. It’s a real conundrum,” stated Hughes, a view echoed by his CF colleagues.


Business THE TM MAGAZINE 52 businessmag.co.uk


Creating investable relationships White highlighted that many SMEs do


Robert Lamden: MD, BtL Communication


Jocelyn Lomer: MD, Cereno Gamil Magal: CEO, Magal Engineering


Ian Milne: Managing director, Spectrum Corporate Finance


Alex Snodgrass: Investor, Business Growth Fund (BGF) Simon White: Partner, Altitude Partners


David Murray: publisher of The Business Magazine, chaired the discussion


not get themselves properly prepared for investment, which can also deter investors.


Snodgrass: “You have to do a lot of work with some management teams, building up relationships, helping them get to a stage where they can be investable.”


Caswell: “Successful deals are all about building relationships, trying to understand the businesses, what key individuals want to achieve, and establishing a joint track record with them.”


“About a third of my meetings are with businesses below our investment criteria, on the basis that at some point they could be targets for us,” added Snodgrass. The majority of his completed BGF deals are with businesses known for more than one year.


THE BUSINESS MAGAZINE – THAMES VALLEY – APRIL 2017


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