The UK is a nation of entrepreneurs, with SMEs (small and medium-sized enterprises) accounting for 99.9% of the business population in the UK.1 Of those SMEs, high-growth companies represent over 50% of the total SME turnover.2 The UK ranks third in the world for the ease of doing business,3 has a highly skilled and diverse workforce and strong infrastructure to support innovation-driven businesses. Over 700 companies have shares traded on UK growth markets4 with a market capitalisation ranging from just a few hundred thousand to over £3bn. There are 13 million people in the UK with cash savings of approximately £430bn that could be proactively invested5,6, with more than four million people who want to take at least some form of investment risk.7 Taken together these factors create the ideal backdrop for growing companies.
However, while the UK has a strong record of building innovative growth companies, too many of them are choosing to continue their growth outside the UK. Despite their reputation for easier access to capital than on a main market, there is concern that UK growth markets8 have been overlooked by recent capital markets reforms. Recent market volatility has affected investor confidence; Liquidity concerns have made it harder for companies to trade shares and for investors to exit positions and a narrower pool of institutional investors has impacted price discovery. The lack of focus on the markets alongside these concerns has created a challenging environment for growth companies looking to go public in the UK.
To keep the value, innovation, jobs, tax revenue and economic growth that UK growth markets support we must treat them as a source of strength, building economic security for individuals across the country and supporting the governments drive for growth.
Throughout their lifetime, growth companies will access various equity and debt funding options as they grow and their business needs evolve. From bank loans, government-backed or regional schemes such as the Enterprise Investment Scheme (EIS), angel investors and venture capital, to private equity to public equity markets, the right funding option for a business depends on factors such as their stage of development, the sector in which it operates and its growthpotential. UK equity markets are one source of funding that can play a critical role in enabling entreprenuers up and down the country to build their businesses, create jobs, support their local communities and drive economic growth.
UK growth markets in the financial system
