2021 will be a critical year for many businesses. Despite the existential challenge created by ongoing COVID restrictions (especially considering reduced governmental support), many small to mid-market businesses are focussing their efforts on growth this year. They know this will be challenging, but they are up for it. At Link Stone Advisory we track market conditions to help clients understand and identify what might just make the difference for their business this year.
Beauhurst is the most comprehensive database that tracks scale-up businesses in the UK and we’ll be using it to provide insights into those whose growth would suggest a level of immunity to current conditions.
In this article, we’re focussing on the South West and their high-growth Creative industries.
In total Beauhurst tracks 2,097 fast-growing businesses in the South West that are still trading but have not sold up to larger businesses. Key points are;
- The database identifies a definite skew towards business services, which includes a dynamic creative and tech sector.
- 42% of scale ups are identified as being at seed stage, as opposed to
venture, growth and established stages. This staging profile suggests that many businesses struggle to progress to the more mature stages, which is a theme we’ll pick up in later posts.
- Beauhurst reports that the adverse effects of Covid have been falling, as
expected, since a peak in Spring 2020.
- Fundraising peaked in 2018 and continued to decline through 2020. 55% of fundraisings were to seed businesses and 26% to Ventures, again highlighting the challenges of progressing to maturity. Crowdfunding is a key source of funding, and local investors Bristol Private Equity and University of Bristol Enterprise Fund have a significant impact. While there are fewer locally-based investors than other regions, the excellent support to entrepreneurs from SetSquared and TechSpark are notable characteristics of the region.
Key takeaways include;
- Creative industries, often overlooked by business trackers, are a highly significant part of the South West’s economy. Despite their high-growth, many creative industries struggle to access investment, so identifying active investors in a relevant sector or region helps focus efforts.
- The stage of business for creative companies is consistent with the rest of the region although the adverse impact of COVID is noticeably lower. This highlights that, despite the widespread impact on theatres and video production, many media businesses have successfully adapted to the challenging environment (or have grown).
- Within the creative category the largest sub-sector is business-to-business, which is consistent with the general media trend away from consumer-based revenues. For example, a publisher is more likely to obtain advertising and affiliate revenues from a business than pay-wall subscriptions from subscribers. However the categorisation of media as ‘business services’ based on revenue streams conceals their consumer-centric operations.
- Major fund investors in creative industries in the South West are more likely to be US or EU based. There are investment and funding opportunities from specialist VCs as well as media-focussed business angels. In addition, creative entrepreneurs in the South West are actively supported by WECA, TechSpark and Setsquared in addition to nationally available options unique to the sector.
How we can help: If you want to understand your scale-up options, get in touch for a free consultation. We provide advisory and corporate finance services to support clients achieve revenue growth, profit growth, investment and fully assess their strategic options and implementation.