Member Article

Mid-market entrepreneurs suggest difficulties in access to capital

Many of the UK’s mid-market entrepreneurs expect access to external capital to be difficult this year, according to research.

The Investec Entrepreneur Confidence Index, which tracks confidence levels among entrepreneurs, found that nearly one in four of those surveyed expect it be ‘very hard’ to secure capital.

Some 31 of the country’s leading entrepreneurs were interviewed; their businesses totalling £1.3bn annually in combined turnover.

The most popular sources of capital will be bank loans and overdrafts at 61%, followed by cost savings in businesses and working capital at 35%, and invoice discounting and asset based lending at 29%.

Nearly one in four plan to use mezzanine finance, the highest number recorded since the launch of the index in 2009, and 19% said they planned to raise funds through venture capitalists and private equity firms.

Ed Cottrell, Investec said: “The ‘Entrepreneurial class’ has a key role to play in helping the UK economy to grow, and our findings show that many have plans to expand their operations.

“However, some clearly have concerns about raising capital from third parties, so it is not surprising to see so many planning to use retained earnings and cost savings in their enterprises to fuel their growth.

“It is also interesting to note that many plan to make greater use of alternative sources of finance, including mezzanine finance and asset based lending.

“This helps explain why over the past 12 months, we have dramatically increased the amount of money we have lent to successful entrepreneurs, and we plan to continue supporting them.”

The survey turned to successful mid-market entrepreneurs, with a turnover of at least £1m, in December 2011.

This was posted in Bdaily's Members' News section by Tom Keighley .