The Trading Places Report out today from Barclays and Beauhurst reveals the growth opportunities for high growth firms in the UK and their plans to tap further into international markets as they look to bounce back from the pandemic.
The ‘Trading Places’ report reveals that UK high-growth companies have raised £19 billion in foreign investment in the past three years alone, with UK businesses proving to be an attractive proposition for international investors.
Trading Places Report
Nearly half of the total equity investment in high growth firms over the past four years was funded by deals with at least one foreign investor. Since 2011, 36 per cent of deals involving foreign investors were for companies raising their first round of equity.
The report, which includes data from Beauhurst’s network of over 36,000 high growth UK companies, also shows a boom in US investment. Over the past decade, the annual value of deals involving US investors has grown by more than 620 per cent, amounting to £4.5 billion in 2020 alone.
Equity investment into software companies (Software as a service), was the most popular among international investors between 2011 and 2020 with internet platform, mobile app, and analytics companies following close behind.
Founded in Ireland, one company to benefit from this international investment is Machinery Partner, a company offering novel procurement, financing and support for small businesses needing heavy machinery. Their unique, integrated and digital model reduces costs and unnecessary expenses for small businesses, enabling them to better compete and scale their business.
Ciaran Gillen, co-founder and CEO, said: “From dealer networks to service practices, to leading and financing – everything is harder, costlier and less efficient for the small businesses that are the backbone of the economy. We are on a mission to democratise access to heavy equipment for these small and emerging businesses in the US and around the world.
“We relocated the business to Boston to be part of the Techstars accelerator program which has given us access to prominent angel investors and resulted in us being able to tap into a huge global market.”
The report also explores investment into the UK from the EU post-Brexit and via Innovate UK grants. In 2019, the value of deals involving EU investors hit a high at £2.4 billion, showing the continued importance of the UK’s relationship with its closest neighbours, whilst Innovate UK gave £1.1 billion in grants to high growth firms in 2020.
Katherine Morgan, Head of High Growth and Entrepreneurs at Barclays, said: “More people are considering starting a business now than ever before, and it’s no surprise given the success of our home-grown entrepreneurs, many of whom have skilfully utilised international markets, generating new jobs and driving economic growth.
“It’s clear from our customers that both the EU and the wider international markets are equally attractive when it comes to raising funds, tapping into talent and introducing their products overseas.
“Their continued innovation and pragmatism will be vital as we recover from the economic damage that the pandemic has inflicted on the world.”
The ‘Trading Places’ report makes a series of recommendations to entrepreneurs and business leaders who are considering scaling their business:
- Explore foreign investment – UK entrepreneurs and business leaders should consider the funds and expertise that foreign investors can bring to the table, as these investors look to the UK to diversify their portfolios both geographically and sectorally
- Tap into international talent – Those looking to start a new venture should consider the connections and experience that an international co-founder can bring
- Consider foreign acquirers – US buyers were responsible for 40% of the top 20 acquired companies by valuation over the last 10 years. Business leaders should consider adding some overseas buyers to long lists when weighing potential exits.
Barclays is running a Global Connect programme in September encouraging more high growth firms to learn about international markets. A number of firms will be heading virtually to San Francisco as part of an established four-week programme designed to teach start-ups the fundamentals of raising institutional funding.
To find out more about Barclays support for High Growth businesses visit: https://www.barclays.co.uk/business-banking/sectors/entrepreneurs/