HomeUKUK, VCTA Research Finds Scaleups Held Back by Insufficient Access to Funding

UK, VCTA Research Finds Scaleups Held Back by Insufficient Access to Funding

Venture Capital Trust Association

The Venture Capital Trust Association (VCTA) released a new report, featuring insights into the concerns, constraints and opportunities facing the UK’s most ambitious scaleups.

The research – gathered from a survey of 119 fast-growing firms – highlights that scaleups identify insufficient capital as the most significant barrier to growth, with over a third (36%) identifying it above all other factors.

Although the UK remains a top five global market for venture capital investment, recent research by Dealroom and HSBC Innovation Banking found that $4.9bn was invested in UK startups in Q3 2023 – a decline of more than 60% from the market peak in Q1 2022. This challenging fundraising market for startups and scaleups highlights the crucial role of the VCT scheme, and other similar initiatives, play in driving growth amongst the UK’s class of fast-growing businesses.

Venture Capital Trusts (VCTs) are evergreen funds that provide patient capital to growing companies. Alongside the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS), VCTs provide a steady stream of investment and support to early-stage companies that is less driven by market cycles. The latest figures from the VCTA show that VCT investment grew in 2022 to £664m from £613m in 2021, unlike the wider market downturn. To maintain the schemes, according to the Autumn Statement 2023, the UK Government will legislate in the Autumn Finance Bill 2023 to extend the existing sunset clauses for the EIS and VCT from 6 April 2025 to 6 April 2035.

Despite identifying a lack of investment options as a potential barrier to growth, entrepreneurs remain positive towards the UK as a location to build technology-enabled businesses, with close to three quarters (73%) identifying the UK as an attractive place to grow a company.

Despite the UK’s reputation as global tech hub, accessing talent remains an ongoing challenge for many companies, particularly those in highly technical sectors such as life sciences or deeptech. Close to two fifths (17%) of respondents identified a lack of tech talent as their biggest barrier to growth. It speaks to the ambitious mindset of company leaders that macro issues such as inflation (14%) and regulatory uncertainty (11%) were identified far less often as a significant barrier.

VCWire

22/11/2023