UK small companies are hotting up, according to leading market information service Beauhurst
Beauhurst, the leading source of deep data on growing companies, will release its 2013 Annual Equity Investment Review at an event on 26 February 2014 to be held at the National Gallery in association with the Business Growth Fund.
UK small companies are hotting up, according to leading market information service Beauhurst.
The sector is up by 35% according to Beauhurst's review of 2013, published today.
The rise is heavily attributable to "seed investments" in the most exciting new companies, according to Stephen Bence, Chairman of Beauhurst.
"This area of backing fast-growing companies has typically been the preserve of a small elite of extremely wealthy “business angels”. But with the rapid rise of crowd funding platforms there has been a democratisation of investment, with the public looking to get a stake in a small company on the ground floor with a view to backing a winner" says Bence.
"Over £1.5 billion was invested into 650 of the UK’s fastest growing companies in 2013. That’s small beer for a giant corporation but for our growing companies it’s the difference between getting the next Mark Zuckerberg out of his student rooms and onto the road to the FTSE 100," adds Bence.
Stephen Bence, Chairman and Co-founder of Beauhurst, will share his findings on UK equity investment to the hundreds of finance professionals in attendance. He will say:
Equity investment is booming
Beauhurst research shows that 2013 was a boom year for investment with over £1.5bn invested into 650 of our fastest growing companies. That's 35% up from 2012. And our very early data from 2014 suggests that investment in the first 8 weeks of the year is up 65% from the same period in 2013.
The angel flies
Much of the growth in equity investment is down to seed-stage investing, which has risen hugely in recent times with the 2013 total exceeding the combined total from 2011 and 2012. This is the typical preserve of the "angel" investor whose interest has been kindled by generous tax breaks and a rise in crowd funding platforms such as CrowdCube that make it easier to access the seed-stage market. Investments concluded via these platforms have increased 8-fold over the past 12 months.
It is oft said that there's no "venture" in "venture capital" and there is certainly a mismatch between the disruptive technologies that have dominated the media (bitcoins and 3D printing particularly come to mind) and the activities of the venture capital community (just a single bitcoin investment and nothing for 3D printing during 2013). This isn't because these areas are pure media hype because there have been plenty of US investments in these areas.
The new equity gap
While early-stage (seed) investing and later-stage (growth) investing are booming, the middle- stage (venture) is losing market share. There is a real risk that this stifles the growth of the promising batch of seed stage companies that will need investment over the coming years. There is a clear need for Government to look at what it can do to stimulate this part of the market.
Dr Stephen Bence, Chairman and co-Founder of Beauhurst, said:
"2013 was a boom time for high-growth companies seeking equity investment and the early signs in 2014 are that this trend is set to continue. However, while early-stage and late-stage investment is very strong, middle-stage investment is losing ground. This is the traditional preserve of venture capital investors who are retreating to larger investments risking leaving a substantial equity gap. The Government – whose tax incentives have been instrumental in stimulating early-stage investment – needs to get a grip on this problem rapidly otherwise corporate seedlings risk withering well before maturity."
Beauhurst – formerly UKFunders – was founded in 2010 by Dr Stephen Bence and Toby Austin and is dedicated to providing professionals with deep data on growing companies.
If you'd like to find out more, please take a look at www.beauhurst.com