Lack of capital is holding back scale-ups, according to the report – Growth Business

Scale-ups say a lack of capital is holding them back from growth, according to a report from the Venture Capital Trust Association (VCTA).

The research – collected from a survey of 119 high-growth companies – found that more than a third of startups identified this limitation above all other factors.

Although Britain is Europe’s venture capital hotspot, trailing only the US and China in levels of funding for start-ups so far this year, there has been a decline of more than 60 percent from the first quarter of 2022.

Other growth barriers reported included access to talent – ​​especially those in highly technical sectors such as life sciences or deep tech – with 17 percent of entrepreneurs citing the issue as their top concern. Macro issues such as inflation (14%) and regulatory uncertainty (11%) were identified as major barriers for some companies.

However, entrepreneurs remain optimistic about the UK’s prospects for technology development, with 73 percent seeing Britain as an attractive place to grow a business.

Will Fraser-Allen, Chairman of the VCTA, said: “The vital role of VCTs in the investment ecosystem has never been clearer, and we are pleased to see that – despite the difficult economic and investment climate – fast-growing scale-ups are continuing to to support Britain as a place to grow, and there is significant demand for the capital and talent needed to drive further expansion.”

Richard Stone, CEO of the Association of Investment Companies (AIC), added: “This report clearly shows that lack of funding and talent are real barriers to growth for Britain’s most promising companies. VCTs help companies successfully overcome these obstacles by providing essential scale-up capital and support that helps founders realize their ambitions. This is especially important during economic downturns, when financing is even harder to come by and VCTs may be the only source of capital.

“In challenging times, VCTs have continued to attract record levels of new capital to invest in promising young companies. The optimism of these ambitious companies about Britain’s position as a technology hub and a good place to do business bodes well for the future.”

More about scale-up financing

British Business Bank wants to support more scale-ups – The bank’s new CEO says he would like to see the bank close a funding gap for scale-ups looking for £50m or more

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