When it comes to finding funding, small businesses should consider how well their finance partner knows their unique needs, rather than going for the quickest route The funding landscape affecting small and medium-sized businesses has undergone some interesting shifts recently. While banks have become more conservative with their lending, there's also been an upsurge in alternative finance options such as peer-to-peer lending and crowdfunding platforms. But are small businesses taking full advantage of all the options available to them? Armed with a proposition, the majority of small businesses opt to go to the banks first in the hope of securing funding. According to the British Business Bank’s 2015/2016 report, over half of UK smaller businesses immediately go to their main bank when they first identify a financing need rather than shopping around for finance. Unfortunately, success is by no means guaranteed – especially since banks have adjusted their risk appetite over the last few years. But with so many other funding options available now, rejection from a bank doesn’t need to spell the end of the road anymore. That being said, many businesses seem to be hesitant to spend more time assessing the financial options on the table. As well as a reluctance by banks to fund small businesses, there’s also been a sharp change in the day-to-day relationship between banks and their clients. With continuing pressure to reduce costs – which often means staff reductions – many banks communicate with small businesses via their business support teams over the phone or through a live chat online. The rise in digital communications has changed the relationship between businesses and banks, and the intimate relationship that used to exist is now sadly rare. Turned away by their bank, many businesses feel they have no choice but to apply for online loans. And while this approach may work out for some, there are other routes. The problem is that these options are often overshadowed by flashy ads telling people to “apply in minutes” that promise quick decisions. But what chance does the business owner or management team have to really set out their plans or demonstrate their understanding of the opportunities – or the threats? The decision on both sides is simply driven by numbers and data. However, the numbers can look worse if a business is starting up or on the cusp of growth. That's why establishing a relationship between a business and its finance partner is important. Getting the full story requires a conversation and open communication. It’s vitally important that a business trusts its source of finance, and the only way that level of trust can be built up is via a strong relationship. Generic or one-size-fits-all solutions just won't work here because no two businesses are the same. So as small businesses shop around for funding, they should look beyond how much money the other party is willing to put on the table. The good news is that there are many new funders looking to step forward to fill the gap left by banks. It's now up to small businesses to cast the net wider and also to weigh up what a funding partner is offering against what their business really needs. Many businesses opt for the quickest and simplest route, and this is where they can become frustrated. The cheapest deal may come through a simple application process online, but without taking some time to look at other options you might miss out on the best deal. Some funding sources, such as bank loans or crowdfunding platforms, are very visible. But there are others worth exploring that perhaps receive less attention. Government lending schemes in collaboration with local enterprise partnerships or wider schemes funded by the British Business Bank are often tailored to the business' stage of development and can adapt as the business grows and prospers. Crucially, the relationship aspect plays a key role throughout the process. Both parties identify future opportunities or potential risks and work through challenging times together. Support builds trust, which in turn strengthens the relationship. So while data and technology may have encroached on some relationships, they’re still going strong if you know where to look.
A company determined on teaching children about emerging technologies through a fun and supportive club environment has successfully completed its latest funding round. The investment comes from Creative England, the Coast to Capital Growth Equity Fund, managed by the FSE Group and Emerge Education. MakerClub came to life in 2014 and was founded by Simon Riley, named in the 2015 top 100 most influential EdTech leaders.
The company offers weekly technology workshops and online learning to inspire and teach children how to use 3D printers and programme robotics. Starting them off with ice lolly sticks and taking them all the way through to professional 3D printed prototypes.
Simon Riley, Managing Director at MakerClub comments, “Here at MakerClub we feel that not enough emphasis is being put into teaching new and exciting technologies to young children. With the sudden rise of 3D printing this is a great opportunity to teach children about technology that could, in the not too distant future, be a regular part of everyday life. This investment will enable us to open more centres, encourage engagement and reach out to even more children.”
Mehjabeen Patrick, CFO, Creative England, “MakerClub is a great example of an innovative company with fantastic potential, they have a mission with social purpose and it has been inspiring to see how they have grown and developed their business. Simon and the team are passionate about what they do, and have the skills and expertise to take MakerClub to the next level."
Avent Bezuidenhoudt, Senior Fund Manager at The FSE Group, “The MakerClub brand is clearly recognisable and scalable with admirable objectives. The technological expertise of the team paired with their educational knowledge gives the company huge potential. We are delighted to add the company to our portfolio and look forward to watching them grow and prosper.”
Jan Matern, CEO of Emerge education, said “MakerClub is able to deliver high-quality instruction in digital skills consistently and at scale, which speaks of the team’s engineering, customer service and operations prowess. We are proud to be working with them to build a much needed institution for delivering these types of skills to the next generation.”
About MakerClub: MakerClub is an award-winning weekly invention and technology community for ages 8 to 13, we are based in Brighton but have centres all around the UK. Our sessions are project-based, hands-on and created by real technologists who believe that every child has the ability to become an inventor. For more information visit: www.makerclub.org
About Creative England: Creative England invests in and supports creative ideas, talent and businesses in film, TV, games and digital media. We aim to grow the brightest, the best, and those with the most promise so that individuals and businesses can achieve their full creative and commercial potential. We help identify future opportunities to grow the economy and generate jobs. www.creativeengland.co.uk
About The FSE Group: The Coast to Capital Growth Equity Fund is part of the Coast to Capital Funding Escalator, a £5million initiative funded by Coast to Capital Local Enterprise Partnership. The escalator, which also includes an expansion loan scheme, provides eligible companies with loans and equity funding between £50,000 and £500,000 for activities that will deliver high-growth and employment opportunities.
About Emerge Education: Emerge Education is Europe’s leading edtech accelerator. It provides exceptional edtech entrepreneurs with access to the capital, networks and expertise they need to prove their impact and scale globally so that billions of people can lead more fulfilling lives. Emerge Education provides up to £100k in funding for edtech startups and is based in Hoxton, London. For more information, please visit http://emerge.education/ or contact Jan Matern, CEO at jan@emerge.education
With a family history of stonemasonry dating back to the 1600s, Wood for Stone owner and 6th generation master stonemason, Andrew Wood, is now bringing production at his Manningtree business into the 21st century with the help of an East of England Regional Growth Loan.
With a diverse range of natural stone products that includes fireplaces, staircases, kitchen worktops, and headstones to name a few, the company holds experience and expertise in all aspects of stone which sets it apart from the more limited competition. This wide service offering together with a good mix of corporate and private clients saw demand rise beyond the means of the business during 2016, as Andrew explains: “Our team of four skilled craftsmen developed an exceptional reputation for producing work of the highest quality across a broad range of products and services. This brought a welcome increase in enquiries both from returning customers and new contacts as word of mouth referrals spread. However, last year we reached a point where we were having to turn work away – a situation that no business wants to be in – so we decided to invest in changes that would boost capacity to meet that demand plus allow room for further growth.”
Finance East provided Wood for Stone with a £160,000 loan from the Regional Growth Loan Scheme (RGLS) to purchase a state of the art cutting machine and assist with costs to move the business to a larger unit. The machine has sped up some of the operations that were traditionally done by hand whilst also freeing up skilled employees – including Andrew’s daughter, Laura, the 7th generation stonemason in the family – to produce more of the detailed stonework.
This should enable production to double this year, which will be supported with the addition of two further stone cutters. Stuart Ager, Senior Fund Manager at Finance East which manages the RGLS, says: “By taking steps to increase capacity, Andrew can now look to expand the current market base further, particularly focusing on the commercial sector where there is a significant opportunity to work even more closely with quality builders seeking high end finishes. Wood for Stone’s strong working relationships with suppliers together with its extensive skillset and sector knowledge means that it is well positioned to deliver against the varied needs of its growing list of clients.”
The RGLS is managed by Finance East, part of The FSE Group, on behalf of Local Enterprise Partnerships in the East of England and British Business Bank. The RGLS is available to established, incorporated businesses based within the East of England that have a minimum annual turnover of £100k, show strong growth potential and have a medium to long-term funding requirement to deliver that growth.
Following a period of compelling growth, a business helping retailers better understand and engage with customers has secured further funding from the Coast to Capital Growth Equity Fund as part of a £1.5million funding round from both new and existing shareholders. Yocuda was set up in 2011, to provide a digital receipt service to retailers. Over the last six years this has been developed into a sophisticated offering; using leading technology Yocuda helps retailers not only capture customer data, but also fully analyse and understand that data to enable advanced customer engagement. Now boasting a number of the UKs most prominent high street retailers as clients, the company is in a position of strength with monthly revenues having grown by more than 600% since the first investment from the Coast to Capital Growth Equity Fund less than two years ago. An impressive 483million e-receipts have been processed by Yocuda for more than 35 million unique customers across 20 separate countries. Andrew Carroll, Yocuda Founder and CEO, says: “As the business moves forward we are pleased to continue this journey with the support of our investors and look forward to continuing to work with them to realise our next set of goals for the growth of the business.” The £100,000 from the Coast to Capital Growth Equity Fund will be used, alongside other funds raised including investment from the FSE Investor Network, to create new jobs to meet increasing demand and grow the business further. This will include a number of developer jobs in Croydon. Avent Bezuidenhoudt, Senior Fund Manager at The FSE Group, which manages the Coast to Capital Growth Equity Fund on behalf of Coast to Capital Local Enterprise Partnership (LEP) adds: “With a highly strategic view of the market and the opportunity for Yocuda, the executive management team is continuing to achieve revenue growth and market acceptance both in the UK and abroad, leaving the company well placed to create shareholder value. We are delighted to be supporting them again in this latest funding round. The Coast to Capital Growth Equity Fund is part of the Coast to Capital Funding Escalator, a £5million initiative funded by Coast to Capital Local Enterprise Partnership. The escalator, which also includes an expansion loan scheme, provides eligible companies with loans and equity funding between £50,000 and £500,000 for activities that will deliver high-growth and employment opportunities across the Coast to Capital region.
A company producing tools to monitor and manage gas pressure within gas distribution networks (GDNs) is the latest to receive funding from the Enterprise M3 (EM3) Growth Fund.
Utonomy has been working with two of the UKs four GDN operating companies to develop a fit for purpose “Smart Grid” solution as there is currently no effective system available on the market. The company has created its Active Grid Management solution, comprising relevant hardware (actuators and sensors), installed throughout the gas network, with a cloud-based software platform using self-learning algorithms to continually optimise the network remotely.
CEO Adam Kingdon, who established the company in 2015 after being approached with an opportunity to apply his experience in water pressure management to the gas distribution industry, outlines the problem: “The demand for gas is influenced by time of day/week/year, weather conditions etc.; at its highest, demand can be up to 100 x greater than at its lowest. This means GDNs are managing an ever present conflict between a) ensuring gas pressure does not go below the minimum requirement at any given time and b) too much pressure resulting in system leaks, which is not only costly, but also has environmental implications – an area monitored by Ofgem. GDNs have found existing systems for managing pressure to be inadequate, resorting to labour intensive manual adjustments. A costly process, these adjustments take place only a handful of times throughout the year resulting in gas pressures being set to the incorrect level 99% of the time.”
Utonomy’s offering is unique on several levels: its actuator is able to operate in dangerous substance environments; its intelligent software will interpret the statistical relationship between weather temperatures, calendar fluctuations etc. and changes in pressure to generate accurate predictions for high and low pressure points; its hardware can monitor the ongoing condition of the network resulting in faster detection of mains breaks along with easier maintenance planning.
The £150,000 EM3 Growth Fund investment is part of a larger funding round that will see the company establish its international sales and marketing base in Basingstoke. The funding will help the business to further commercialise its offering and gain traction throughout Europe and in North America.
Ralph Singleton, Fund Manager at The FSE Group, which manages the EM3 Growth Fund on behalf of the Enterprise M3 Local Enterprise Partnership (LEP), comments: “Utonomy is responding to a clear market demand for a solution to real problems facing the gas distribution industry globally. The company’s strong technological background and extensive industry knowledge and contacts has allowed it to work directly with end clients to develop an innovative product that will fully meet their needs, offer a good ROI and help them deliver against environmental targets. We are pleased to be supporting them on this exciting journey to achieve their full potential.”
Geoff French, CBE, Chair of Enterprise M3 LEP adds: “Enterprise M3 LEP area is home to a vibrant Sci-Tech corridor and this is due to a conscious collaborative effort creating the conditions for innovation to thrive. We are pleased that Utonomy now has the financial resource to expand, increase productivity, create more jobs and be part of our ecosystem of technological excellence.”
The Enterprise M3 Growth Fund is part of the Enterprise M3 Funding Escalator, a £5.5million initiative funded by Enterprise M3 Local Enterprise Partnership. The escalator, which also includes an expansion loan scheme, provides eligible companies with loans and equity funding between £50,000 and £200,000 for activities that will deliver high-growth and employment opportunities.