In 2018, 216,204 companies were founded in London which represented a six percent rise from 2017. The reasons behind this are varied but ultimately comes down to the fact that after some initial uncertainty there is a drive to create businesses and grow.
Being an entrepreneur and owning a business has become, in recent years especially, a very cool path to take for professionals in their career. This trend has given a huge amount of confidence to those looking to start a business, backed by a huge range of fantastic, innovative ideas. The rise in the number of women entrepreneurs, due to rising confidence and the increasing support, has also had a significant impact. 2018 also saw a concerted move to get on with business after some initial Brexit uncertainty.
Technology and those businesses that qualify as ‘knowledge-intensive’ have received a huge amount of support from Government initiatives such as the Enterprise Investment Scheme and this has been reflected in the number of start-ups. At IW Capital, we saw more deal flow than ever in 2018, with more investors and more opportunities for both entrepreneurs and investments. Small businesses are the most adaptable and nimble in response to change and people will always find a way to do business with these firms, to whom Brexit could be a fantastic opportunity.
Sectors such as fintech have been enormously trendy to invest into in recent years. The financial crash of 2008 created a huge amount of mistrust toward big banks and fintech entrepreneurs have taken advantage of that. The disintermediation of banks from areas such as travel money has given rise to a new kind of financial service firm, an area set to carry on this trend. There are some brilliant ideas in fintech and the problems they solve are widely unrelated to Brexit meaning that investment is likely to continue to grow.
So far, we have seen strong deal flow in the investment into SMEs through both EIS and our debt fund offering and this looks likely to continue. Brexit and the prospect of no-deal is not really a feature in our discussions and isn’t slowing investment into the businesses we work with. Business will happen regardless of the outcome and people won’t wait around forever to see what happens before making key decisions such as investments.
Investors are becoming more and more sophisticated and as well as looking for great returns, are now focusing much more heavily on the social impact of their investments. A growing number of the investors I talk to are looking for companies that will make a difference in the world, whether that be through altruism or innovation. Overall there looks to be an increase in the conscientiousness of investing, especially in small companies.