Paul Jones, Senior Manager for the South West at the British Business Bank, the UK’s economic development bank, discusses some of the routes to finance that exist for startups and smaller businesses.
British Business Bank is a delivery partner for the StartUp Studio, a virtual accelerator for early stage startups in the South West.
The South West has a flourishing startup scene, it is critical to our economy that they are given the best chance of success, and for the vast majority this means awareness of and access to the different types of external finance. A part of my role at British Business Bank is to build links between regional businesses, local financial intermediaries and the Bank to help smaller businesses access the finance they need.
The British Business Bank delivers funding programmes that address existing gaps in the small business finance market. We don’t lend or invest directly. Instead, we work with over 180 delivery partners such as banks, leasing companies, venture capital funds and web-based finance platforms.
We increase the range of funding choices and provide independent and impartial information to smaller businesses on their finance options, many of whom will be at different stages of their funding journeys.
And in no space is this more important than for start-ups. As an inception point our Start Up Loans programme provides loans of up to £25,000 per individual, a maximum of £100,000 per business, facilitated through our delivery partners such as SWIG and Outset based across the South West. In addition to finance, successful applicants receive twelve months of free mentoring and advice. Our Learn with Start Up Loans partnership with the Open University also provides a free and rich source of information for anyone who’s new to being their own boss, and those who are considering taking the plunge.
This month the programme will reach 5,643 individual loans delivered to entrepreneurs in South West over the past nine years, worth £44.5m. One example is Powderkeg Beer in Devon, who put the joy back in your glass. Our mission is to entice drinkers from the bland and the boring to the bold and the brilliant, and to find time for conversation and contemplation over a beautifully crafted pint. They took a start-up loan as part of their initial phase before bringing in angel investment.
And speaking of angel investors, as businesses grow and start to scale up many will look to secure angel investment. Alongside equity finance, angel investors also bring business experience, strategic advice and networking opportunities.
In this space our £100m Regional Angels Programme has been making real in-roads since launching in October 2018, making eight portfolio investments, totalling £100m of commitments and deploying over £25m into more than 250 businesses. This includes the £10m investment with Newable Ventures and BPEC allowing more investments across the South West.
And there are also alternative methods of sourcing finance emerging, many enabled by the boom in fintech. For example, awareness of crowdfunding platforms is rising, and they have been responsible for millions of pounds worth of equity being leveraged.
Debt finance remains the most well-known finance option amongst smaller businesses in South West, based on a recent survey of local finance intermediaries conducted by IPSOS Mori on behalf of the Bank. Looking more broadly, respondents in the study identified a lack of awareness of the finance options available as one of the top three barriers to smaller businesses demand for finance in South West.
We at the British Business Bank are working closely with regional and national partners to enhance the finance ecosystem in South West to help address challenges like this. This is in part undertaken through the running of events and education programmes with the likes of FinTech West, Tech South West and the Scaleup Institute amongst others.
Despite the difficulties of the last eighteen months, South West remains a fertile place for smaller businesses to establish and grow. In fact, since the onset of the pandemic we have seen record numbers of new firms being created. They must be given every opportunity to not only survive, but thrive.
For more information: https://www.british-business-bank.co.uk/finance-hub/ and to keep up to date with events happening in South West follow British Business Bank & Paul Jones on LinkedIn: linkedin.com/in/pauljones-britishbusinessbank