How and Why the Alternative Finance Industry Must Evolve to Support SMEs

9th September 2016

At IW Capital we have long championed the importance of SMEs to the health and growth prospects of the UK’s economy. Accounting for 99.9% of private sector businesses in Britain, these small and medium sized enterprises are, as Prime Minister Theresa May stated last month, now the backbone of the country.

It is positive to see, therefore, a new piece of research released this week which states that by 2020 SMEs in the British cities that have the best growth prospects for small and medium sized businesses will contribute £16 billion a year to the economy. Furthermore, according to the report by npower Business and Capital Economics, these businesses – dispersed across all parts of the UK – will add 200,000 jobs to the country’s private sector annually in four years’ time.

The study highlighted London, Bristol, Leeds, Birmingham, Brighton and Hove, and Manchester as the cities with the best potential for SMEs in the next five years. The varied location of these enterprise hubs demonstrates the importance of supporting small businesses in every corner of the British Isles, something that we shed light on earlier this year when we launched our SME Heatmap – an interactive map guiding investors through the regions and sectors that are driving Britain’s private sector forwards.

To support the continuous progression of SMEs across the country, it is of paramount importance that business owners have access to growth finance. Over recent years, alternative finance has played an increasingly important part in providing this support – the industry has grown from a value of £267 million in 2012 to £3.2 billion in 2015. However, despite this impressive performance, the sector risks plateauing if industry leaders do not continue to educate investors, raise awareness among SMEs and find ways to harness the private investment potential that Britain has to offer.

Earlier this week IW Capital’s CEO, Luke Davis, discussed this issue in an exclusive feature for City A.M. In the article Luke explains why it is essential that the infrastructure of the alternative finance industry evolves to ensure it can continue to provide adequate support for the UK’s scaling small businesses. Read the article in full, here.