Venture capital and private equity investment in small and medium-sized enterprises grew by 43% in the year to October 2015, according to a recent report published by the British Business Bank.
The alternative finance sector (lenders such as peer-to-peer platforms and challenger banks) saw lending rise sharply by 75% to £1.6 billion. The report also indicated that the four largest banks accounted for 80% of the small business loan market in 2014.
With 56% of smaller firms aiming to increase their turnover during 2016, there is demand for more ‘scale-up’ funding. According to the report, UK start ups are less likely than those in many other countries to grow to more than ten employees, and this poor scale-up performance is a significant factor in the UK’s productivity slump.