Finance Fred Heritage · 14 December 2016
Interest in equity finance soars as entrepreneurs lose faith in banks
The appetite of small UK business owners for equity-based finance has increased significantly this year, while traditional bank lending has fallen, new data has revealed. According to the year-end report from Albion Ventures, one of the country’s largest venture capitalists, around 45 per cent of owners at smaller businesses considered taking equity finance in 2016, up from 34 per cent a year ago. Taking into account the views of owners from over 1, 000 of Britain’s fastest growing companies, the report’s findings suggested small firms are increasingly moving away from a reliance on bank debt to fund growth. This jump in interest follows the exponential growth in popularity of equity-based finance amongst small businesses in the last few years. According to the report, in 2013 just 12 per cent of UK owners were willing to swap equity for financial support. London-based small company owners are more likely to consider equity-backed investment than in other UK regions, while millennial entrepreneurs are the demographic most likely to consider swapping a stake in their new business for funding. Male business owners are more likely to consider equity-based finance with 28 per cent seeking venture capital, private equity or angel investment this year, compared with 16 per cent of their female counterparts. Commenting on the findings, Albion Ventures managing partner Patrick Reeve welcomed the emergence of what he called the Dragon’s Den generation? those entrepreneurs under 35 years-old who embrace equity culture.
ABOUT THE EXPERTFred Heritage
Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.