Gov Grant’s Charlie Whitehead blogs on a fascinating day with the entrepreneurs of Manchester.
On 16 May I attended Connected Investing held in Manchester University’s Bright Building. The Connected Investing event series is delivered through a partnership between UKBAA (UK Business Angels Association), the trade body for early stage investing, and Innovate UK, part of the government-funded UK Research and Innovation.
The attendees were a mix of entrepreneurs and investors. The investors included angel investors, those awarding grant funding and those looking to issue venture debt to businesses. The entrepreneurs at the event were from Manchester’s start-up scene, mostly in the booming tech space.
Entrepreneurs were primarily concerned about doing the right thing when it comes to getting funding for their company. The audience were encouraged by the panel discussions and the speakers at the event to have confidence in how they fund their businesses which was great to see!
But I fully understand the concerns, as they are mirrored by those start-ups in my current client base. The funding space is a complex one with concerns over:
How much equity investors are taking from the company?
Grants and investment are incredibly competitive, and they come with a lot of conditions. For example, matched funding or the investor may really scrutinise who else takes equity in the business.
There are a myriad of applications to navigate for those looking for grant
There are many terms attached to taking investment. They include being put on a risk register, undergoing very in-depth commercial plan scrutiny and even having a monitoring officer check up on entrepreneurs and their businesses.
Henry Whorwood, from Beauhurst, a database of the UK's high-growth companies, explored UK investment trends, particularly the North of England. He noted that investment had actually taken a small dip recently and was starting to flatten out. This was attributed to one word that we all love to hear… Brexit.
The good news is for companies looking there are still lots of deals out there. Of course, London dominated the bulk of the deals. But here in the north of England, Manchester topped the charts. Interesting too was that deal numbers have decreased but deal value has increased, so for those who can get funding it’s likely to be a bigger slice than in previous years.
For those lucky enough to secure investment funds and start implementing business critical research, it's of paramount importance that to use that money and maximise the full benefits.
What many conference delegates didn't realise is that even though their company is still loss making they can still receive R&D tax credits. This ensures that money used from their investment partners is being put to best use. 33% of any R&D cost can be claimed back from the HMRC and re-invested in the company.
As well as accessing correct and proper funding, it is essential to know how to maximise that investment. Any money claimed through R&D tax credits also comes T&Cs free, very handy if you’re looking for capex in a different part of your business.
The event made clear that the sectors dominating start-up investment are in Fintech, Medtech, AI, autonomous vehicles and manufacturing. And, at the core of everything these entrepreneurs are doing is research and development. They are true innovators in their spaces doing a fantastic job for our economy. This really ensures that the consumer has wide choice and proper options. When it comes to things like new technologies and medicines, this choice can be a matter of life and death.
I am not a business owner but I do help entrepreneurs and directors do an excellent job of maximising their finances, and most entrepreneurs are keen to know that they are doing the right thing for their businesses.
When looking for investment, it always boils down to one key take away: ‘you miss 100% of the shots that you don't take.’