On Monday this week, I attended the annual conference held by the Confederation of British Industry. With UK businesses so crucial to economic recovery, and such radical political shifts in 2010, the conference this year was a pivotal event. It bought together figures from politics, finance and industry, and it was something of an honour to hear directly from politicians who are working to shape the UK's progress, including Prime Minister David Cameron, Business Secretary Vince Cable, and Leader of the Opposition Ed Miliband.
As a representative of Octopus, where a key focus for the Ventures division is supporting the UK's SMEs, I was interested to hear from speakers about their thoughts on business priorities. The importance of SMEs was recognised, with a clear understanding that the Government needs to promote the availability of funding. David Cameron spoke about helping companies in the private sector to grow, while Ed Miliband talked about the need for "greater public involvement in helping to finance the small business sector, for example through a new small business bank like the ICFC."
This is a reference to a previous Government funding initiative, the Industrial and Commercial Finance Corporation, which successfully delivered support to SMEs for over 40 years, up until the end of the 90s. Without it, there has been a gap in funding and this gap remains. There are currently many smaller companies with revenues in the £3-10 million range, which really need funding in order to progress. They've grown too big to qualify for funding from Venture Capital Trusts and Enterprise Investment Schemes, yet they're still not big enough to be considered a lower risk investment. Our concern is that in all the current discussion about funding, potential fund providers like the Government and banks are missing this gap.
Yet the Government is depending on many of these private smaller companies to fill another gap, in the economy, by creating the jobs and revenue that will help restore stability. So we need to see a reciprocal relationship being built between the Government and UK SMEs. Ultimately, if we can depend on the Government to create an environment for funding, we can depend on these companies to aid the economy.
In the meantime, what we're likely to see is a continued trend of UK SMEs looking to raise equity investment, as very very few banks and other fund providers will want to provide more…
