Feature article:

How the world of small business funding has changed

Captain Mainwaring has left the building

• The fundraising journey of companies has changed dramatically in the past 25 years.
• The beginning, typically, still involves family and friends and, perhaps, a friendly bank manager.
• The end remains much the same, too.
• For the stages in between, the landscape has changed:

1. the local bank manager rarely plays a role these days;
2. companies come to the public markets later in their journey; and
3. private equity takes a much larger role.

• The UK is good at early stage, with supportive schemes such as EIS…
• …but has lost out on larger companies to New York, where valuations can be substantially higher.
• The environment continues to evolve, with the recent launch of PISCES platforms showing early signs of success.
• Founders, owners and managers often have little understanding of:

1. how investors look at companies and which type of investor they should be focusing on;
2. how to talk “investor”; and
3. how to value their business.

• On the one hand, the changes have made it difficult for retail investors to partake of certain opportunities, which are now dominated by private equity, while, on the other hand, the EIS scheme has allowed some retail investors access to exciting propositions.

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