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Exploring investment and funding opportunities for SMEs

Posted on: 03/09/2021

For many SMEs in the UK, it can be difficult to navigate the various streams of funding and finance available to them, especially with the addition of COVID-19 relief schemes introduced in 2020.

The UK has seen a 14% increase in the number of new business start-ups, and in the latest research from the British Business Bank, smaller companies have received a record £8.8 billion of equity investment, despite the disruption of both COVID-19 and Brexit. Research has also revealed that 16% of UK investors are looking to back start-ups and SMEs in 2021. With this in mind, it’s important to understand some of the different types of funding and finance options available to businesses and how we can support them through the delivery of our public sector business support contracts.

Understanding sources of finance & funding

  • Grant Funding

Grant funding often comes from Government agencies, research councils and Growth Hubs. Grants can provide funding for projects or for specific topics or themes, for example Digital Transformation. Although businesses don’t have to repay the grant, the funding often comes with specific requirements for businesses to meet.

  • Equity Investment

Equity finance is suitable for growth stage businesses with potential for accelerated growth. Investment is made in exchange for equity in the business.

  • Crowdfunding

Crowdfunding offers rewards in exchange for investment from individuals through online platforms. This provides an alternative to debt or equity investment, but it can be difficult to reach the funding target.

  • Angel Investors

Angel investment is suitable for early-stage businesses with a clear growth strategy. Business angels will invest their time, money, and resources in exchange for a share in the company.

  • Venture Capital

Venture capital is suitable for early-stage businesses looking for a flexible option to scale quickly. Venture capitalists will invest in the business in return for equity shares.

  • Peer to Peer Lending

Peer to Peer Lending comes from individuals, businesses, and institutions as an alternative to bank loans. This is suitable for growing businesses who are looking to access finance whilst retaining control of their business.

  • Terms Loans

A lump sum of capital that is paid back at a fixed rate.

  • Initial Public Offering

An IPO is when a privately owned business sells shares to the public for the first time. This typically allows growth stage businesses and scale ups to raise significant funds.

Navigating the various avenues of funding and finance can be challenging and time consuming. At Exemplas, through our delivery of public sector contracts, our advisers guide businesses through the funding landscape and help them access the funding needed to grow their business.

Innovate UK EDGE has helped 182 businesses in the East of England secure £56.5m in funding and finance in the last 12 months. As an example of this support, Innovate UK EDGE client AgPlus Diagnostics, received £1m in UK Innovation Science & Seed funding and with support from Innovate UK EDGE has seen a 53% increase in revenue, added two new customers and created new jobs.

Hertfordshire Growth Hub, powered by Hertfordshire Local Enterprise Partnership, provides an entry point for all Hertfordshire SMEs to access business support and guidance. Fully funded, tailored support through the European Regional Development Fund (ERDF) is available to Hertfordshire SMEs through the Get Growing 2 service. Experienced Growth Account Managers are on-hand to advise businesses and support them through the months ahead.

The Department for International Trade (DIT) also have funding opportunities available as part of the Export Growth Plan. The plan includes a £38 million Internationalisation Fund for small businesses, which will help SMEs in England grow their overseas trading and strengthen their business. 

Find out more about the work we do to support SMEs.

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