Scale-up tips:

Closing the Covid-19 fast-growth funding gap

According to new figures, economic uncertainty around the coronavirus pandemic has opened a £15bn funding gap between the capital scaling business can access and what they need. Amin Vepari discusses the findings.

It is clear to see there is huge resilience in the Lancashire economy as it recovers from the coronavirus pandemic. We’re seeing a healthy number of new businesses being registered across the county and the demand for Two Zero’s Scaleup Resurgence programme shows that for more established firms, fast-growth remains a priority.

But the changes brought about by coronavirus bring both challenges and opportunities to scale-ups in Lancashire and across the UK.

My previous blog highlighted the challenges, particularly in accessing funding, for female scale-up leaders in the UK. However, a new report highlights the coronavirus has widened the gap between the capital all scaling businesses need and what they can access.

That gap is estimated to stand at £15bn per year. The report, The Future of Growth Capital, highlights a deficit of institutional funds as well as demand-side constraints, suggesting there is a lack of willingness from management to use external growth capital.

“The result is that the UK economy is not benefiting from the dynamic growth that scaling companies can deliver across many sectors and regions,” the report claims.

This added to the economic uncertainty brought on by Covid-19 presents a major challenge in the way scale-up businesses access external funding.

Among the recommendations are changes to UK legislation to make it easier for companies to access capital which is already available, expanding the reach of the national development banks such as British Business Bank, and also the creation of a Future Opportunity Fund to help drive the UK’s engagement with emerging sectors and concepts such as carbon net zero.

But as well as Covid-19 bringing challenges to the scale-up community, will it help to address some of the issues presented in the report?

The pandemic brought about huge changes in the way business is done. One example is the rise in video calling rather than the traditional meeting. This means Lancashire’s innovative, ambitious scale-ups are closer than ever before to the institutional funds of London and further afield.

Recent months have proven that businesses with the infrastructure and flexibility to operate remotely and a product or service which can be sold or delivered online are resilient to the challenge of the past few months.

As the county emerges into a changed business landscape, Two Zero will use its position in the Lancashire economy to do our part to help bridge this gap. We will share tips and advice from experts and partners to help Lancashire scale-ups better understand how to access different types of funding.

If Lancashire’s fastest-growing companies can access the funds they need to scale, the whole county will feel the long-term benefits.

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