7 Shelley Hoppe, CEO, Southerly “Entrepreneurs can have a tendency to hold themselves back during scale-up. We’re good at running a business; accessing capital is another skill. But there’s only so far you can go organically: without external investment, you can plateau. There is a fear of giving up control that must be assuaged” We need scaleups to grow faster, and we need vastly more startups to scale. The figures are sobering. According to the Octopus High Growth Small Business (HGSB) report, despite creating 3,000 new jobs each week and contributing an astonishing 22 per cent to the UK’S Gross Value Added (GVA), HGSBs comprise less than one per cent of companies in the UK. That’s a vast proportion of the UK’s economic potential concentrated in the hands of relatively few firms— and it demonstrates the huge economic incentive for Government to create and support more HGSBs. Poor uptake of finance among scaleups is puzzling—and it’s pivotal to the UK’s competitive edge. What’s behind this dearth of demand? At The Supper Club’s Foresight event, The Future of Finance, low awareness and limited understanding were frequently cited as contributors to this poor appetite for external funding. Financial jargon was also highlighted as a barrier to investment, with founders having to educate themselves about different kinds of funding. It seems the finance industry, while laudable in its efforts to create a wealth of funding options, has done a remarkably poor job of helping business owners to understand them— particularly female founders. Speaking at finnCap’s Ambition Nation event in March, Lesley Gregory, Chairman of Memery Crystal, called upon the funding industry to demystify finance.
But psychological barriers are paralysing many founders. Almost 60 per cent of those surveyed by the ScaleUp Institute cite fear of losing control or poor comprehension of equity finance as obstacles to taking the funding plunge. The Supper Club has seen how peer learning can help founders overcome these barriers, with members sharing their experiences of different funding options to scale—their average growth is 34 per cent year on year. We want to help all scaleups to understand the impact the right funding at the right time can have on their growth. We also understand that it’s about more than money, and members have valued the support that should come with it. Clearly, the funding landscape has evolved faster than its perception. This guide to raising finance is aimed at closing that gap. It combines open and honest insight from members of The Supper Club – each of whom have used a broad range of external financing – with technical advice from supporting partners who have helped them. It’s a reminder that scaleups shouldn’t fear investment, but should expect more from it. This is a rare moment in British business history when high growth entrepreneurs are so revered; afforded so much Government support, and investor appetite. Scaleup leaders have more choice, power and opportunity than ever. But if you don’t use it, you might not have it for long.