The biggest barrier to growth in growing UK companies is insufficient capital, according to a new report.
The Venture Capital Trust Association (VCTA) surveyed 119 fast-growing firms with 36 per cent saying that a lack of capital was the most significant obstacle.
Venture Capital Trusts (VCTs) are evergreen funds that provide long-term investment to growing companies.
It comes after findings from Dealroom and HSBC Innovation Banking found that $4.9bn (£3.9bn) was invested in UK start-ups in Q3 2023 – a decline of more than 60 per cent from the market peak in Q1 2022.
However, despite identifying a lack of investment options as a potential barrier to growth, entrepreneurs were overall positive towards the UK as a location to build their businesses - with 73 per cent identifying the UK as an attractive place to grow a company.
Other problems faced by growing companies was a lack of “tech talent”, which 17 per cent said was a barrier to growth.
Will Fraser-Allen, chairperson of the VCTA, said: “The vital role of VCTs in the investment ecosystem has never been clearer, and we are delighted to see that – despite the tough economic and investment climate – fast-growing scale-ups continue to back the UK as a place to grow, and there is substantial demand for the capital and talent required to drive further expansion.”
The survey asked whether artificial intelligence poses a threat to growing businesses, but 60 per cent said this was not the case.
Richard Stone, chief executive of the Association of Investment Companies (AIC), said despite challenging times VCTs have managed to attract “record levels of new capital”.
He added: “It’s clear from this report that lack of funding and talent are real barriers to growth for the UK’s most promising companies.
“VCTs successfully help companies overcome these obstacles by providing essential scale-up capital and support which helps founders realise their aspirations. This is particularly important during economic downturns, when funding is even harder to come by, and VCTs may be the only source of capital.”
tara.o'connor@ft.com
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