Sourcing scale-up funding in 2019
The former Whitbread chairman and Alliance Boots chief executive Richard Baker has launched his own private equity firm to invest in midmarket, consumer-facing businesses. The new investment firm will target investments ranging from €25 million to €75 million in the retail, leisure, services and health sectors, initially in Britain, Spain and the Benelux countries.
While an increased focus on the private equity arena will benefit the UK economy by increasing the amount of funding available for scaling businesses in the UK, it is as important as ever that junior scale-ups looking for less than €25 million are not left behind by the VC community.
Business at post seed and pre-IPO stage have been left in a funding gap by a lack of available finance. There is far less of a prevalent issue at the £25million pound mark, with multiple sources of investment available at this level, whether from institutional investors or family offices. What is lacking is funding at the £2-6million level for established but still small firms and scale-ups.
Five years ago, David Cameron discussed a £1billion funding gap for UK businesses looking to grow and scale. This gap has if anything grown since then, as investors chase the potentially hugely valuable IPOs and listings by the likes of Uber and Beyond Meat.
The UK may be creating unicorns at a rate of one a month but in terms of start-up and junior scale-up funding we are still a huge way behind the US with a concerted effort needed to address this imbalance in available funding. With around 600,000 start-ups founded each year and less than half making it to their third anniversary, increasing support for these businesses could have a massive impact on the small business ecosystem.
While some players in the private equity and VC community in the UK are focused on midmarket opportunities, it is imperative that we do not allow potential unicorn businesses to fail or look to the US for funding, resulting in huge lost opportunities. This is particularly important given that the UK is looking to make a huge step outside of the EU in a few short months’ time.
IW Capital is keen to help SMEs that need assistance to plan for the future and find the right kind of investment in order to help them reach the next level.
To find out more about IW Capital, or for more information on investment and non-executive opportunities, please speak to a member of the IW Capital team today on 020 7015 2250, or email info@iwcapital.co.uk