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FUNDING
IN ASSOCIATION WITH:
SOWING THE SEEDS OF GROWTH
Investors and fund managers are on a mission – to shift the negative perception of private equity that exists among Lancashire’s early-stage businesses.
Many entrepreneurs and business owners believe equity investment equals loss of control and are reluctant to consider it as a way of powering their growth.
Damian Mohammed, investment director at GC Angels, a leading early-stage investor in the North West, says they are missing out on opportunities. He believes work is needed to change their views and “demystify private equity”.
GC Angels invests alongside angel investors and funds, de-risking and unlocking deals with a focus on high-growth opportunities in the digital, creative and technology sectors.
Damian says: “Equity investment poses a huge opportunity for businesses in their early stages, but we continue to see misconceptions made by business owners when putting together their funding strategies.”
He points to a recent EY report that revealed only 20 per cent of companies named private equity as the primary source of finance that they will be leveraging to fund their growth strategies in the next 12 months.
Damian says: “Despite being a great option for businesses funding growth, some are worried that this could mean a loss of control over their business.
“Private equity is often not reflected well in TV shows, with investors taking large stakes in companies for a relatively small investment and entrepreneurs need to be aware that this is not necessarily a true reflection of what would happen in reality.
“Work needs to be done to shift the perception Bay Business Angels
from loss of control, to gain of expertise and help businesses to see equity investment as an opportunity to both obtain funding and to learn from someone with experience.” Once the work has been done to demystify private equity, there is the issue of securing it.
Damian says: “Early-stage businesses haven’t always been able to access the growth capital they need, which is something that GC Angels has set out to tackle from the start by de-risking and unlocking deals in Lancashire.”
He adds that in the last six weeks GC has showcased 12 companies to investors across Lancashire, in collaboration with county- based partners.
The Covid-19 pandemic has also created challenges for early-stage businesses and that has had a knock-on effect on private equity.
Another report from information services firm Beauhurst highlighted a 20 per cent drop in the number of seed stage deals in the third quarter, compared to Q2. First -time fundraising fell to a new low.
By Ged Henderson
However, Damian says there are glimmers of hope. He says: “As businesses are forced to pivot to digital due to the pandemic, the demand for investment in tech start-ups has risen, while the importance of continued support, such as through follow-on funds has proven to be incredibly significant.”
Steve Wall, at Access to Finance, specialises in early-stage equity, working in Lancashire. He highlights the activities of business angels in the county and his organisation’s work to match them up with entrepreneurs looking for backing.
The ‘Bay Business Angels’ network has exceeded the £1m mark in raising investment in North Lancashire and Cumbria.
As well as Access to Finance, the group is backed by leading businesses in the area. Steve says finding the right angel to invest can work well for a business that has got to a certain point in its development and is looking to grow.
He says part of his organisation’s role is: “Trying to help people to understand the value of the business, what it is actually worth and what it would be to someone else.”
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