Many ambitious businesses are using external finance to grow their company but of the 75 per cent in this position only six out of ten believe they have the right finance in place. Helping them achieve their investment goals is about tackling the regional inequality in funding that scaleup leaders perceive exists across the country, improving the referrals process and providing trusted guidance and better informing scaleup leaders about the finance available to them.

Build awareness

Not all scaleup leaders are aware of the business growth finance available to them. Creating better understanding among the local business population and providing the right services at the right time is vital to ensure that growth can be encouraged. More structured opportunities such as the Quarterly Finance Briefing organised in Bristol would help bring together financiers with growing businesses, letting CEOs and senior teams have a stronger understanding of what is available as well as build contacts and networks. Phsyical Hubs can play a greater role with Investor Enablers as well as online resources. The British Business Bank’s Finance Hub is increasingly being recognised as an important source of impartial guidance, playing an important role in breaking down knowledge barriers amongst businesses and the wider ecosystem.

Use case studies to raise aspirations and bust myths

In the 2019 survey seven out of ten scaleup leaders cite a fear of losing control as significant reason for not seeking equity funding. There is still a job to do to ‘mythbust’ many businesses preconceptions about equity finance and help grow understanding – as one Northern Irish entrepreneur said, “20% of a big cake is more important than 100% of a small cake”. A powerful set of case studies, showing the growth path experience of businesses would help to change business culture and in part tackle the wider issue of aspiration. The importance of smart, long-term money needs to better understood by all players.

Effective advice is tailored and segmented 

Scaleups appreciate a relationship approach to finance and possibly a neutral environment such as the Growth Hub or British Business Bank where they can go for initial conversations about available funds. Upskilling local ecosystem players is core to ensuring that the best information is available, particularly in relation to equity. Scaleup leaders acknowledge that advisers are generally well networked but not necessarily aware of all initiatives.

More effort is needed to segment businesses according to their stage in the scaling journey and to understand what particular finance is required at each stage. The British Business Bank can play a valuable role in disseminating information across the advisory community.

Extend and coordinate networks 

Currently many business connections are informal and fragmented; business support providers need to identify these informal networks to make sure they have the right information on the finance available to scaleups. Professional service providers, such as legal and accountancy practices, and frontline staff in high street banks have a key role to play and need to also be up to date and connected to the wider finance options available to be able to share information with their clients.

Improve connectivity and referrals – ‘Oxfordshire is not Oxford’

Referrals for businesses seeking growth capital – including follow on funding – is currently very fragmented and often based upon informal networks. The referral mechanism under the auspices of the Small Business Act is appropriate for debt. The finance sector in local areas should consider what can be further achieved for referrals bwteeen equity that is more systemised. Developing a more streamlined approach in local areas would help to save companies time and effort and underpin wider work to improve ecosystem connectivity. The British Business Bank’s Finance Hub can play an important role here. In developing the ScaleUp Support Mapper the ScaleUp Institute also hopes this will be a useful tool to investors who meet growing businesses who would benefit from a structured scaleup programme to enable its investment readiness.

In addition a key observation in all areas was the importance of locality – financiers and advisers need to realise city connectivity does not mean regional connectvity with all scaling businesses – as business leaders said “Oxford is not Oxfordshire” and “Coventry is not Birmingham” – effort needs to be made in ensuring finance networks; workshops; investment reaches all areas of a community and locality.

Open up connections to non-executive directors 

In many areas of the country scaleups are constrained by the limited number of Finance Directors with the right skills to help businesses to grow. NEDs and mentors can help to provide expertise and guidance, as can temporary Finance Directors in place for a particular period of time with a business. Better visibility of what and who are available and a trusted source of information on quality is needed to unlock these resources for a greater number of businesses. Business Schools can also play an important role and provide resources to link scaleup leaders with sources of expertise and should consider evolution of alumni Angel networks such as in Henley and Aston.

These insights were gathered at a series of four scaleup finance roundtables hosted by the British Business Bank and the ScaleUp Institute that brought together entrepreneurs with ecosystem representatives from Coventry & Warwickshire and Greater Birmingham, Bristol, Oxfordshire, and Northern Ireland. The feedback from each of them has been factored into the ongoing work of both entities as we seek to remove regional disparities and improve connectivity.