Investors still have confidence in UK SMEs

A survey of investors has found that confidence in UK small businesses remains high despite the financial uncertainty in the wake of the EU referendum.

The poll of 1,000 UK investors, commissioned by IW Capital and Crowdfinders, found that more than half (52%) said they would still be willing to support UK businesses through private investment channels.

Taking modern crowdfunding channels into account, this equates to almost 13 million potential investors in the UK.

SMEs fared better than other investment assets following the vote for Brexit and accompanying market tremors.

According to Lloyds Bank, investor sentiment regarding property fell by more than a third (-35.36%) between June and July 2016. Investor sentiment towards UK shares fell by more than a fifth (-21.75%) and investor sentiment towards UK government bonds also fell sharply during the same period (-15.58%).

Investor attitudes towards property, government bonds and corporate bonds fell to their lowest level since the Lloyds investor sentiment index was launched in March 2013.

The healthier levels of investor confidence towards SMEs could be good news for entrepreneurs and current business owners. Any firm facing financial difficulty can explore and embrace alternative finance options, including the potential for investment.

A study released earlier in the year by Cambridge University and financial charity NESTA showed that the alternative finance market was worth £3.2 billion in 2015.

SMEs were the biggest beneficiaries, with 20,000 individual businesses raising around £2.2 billion between them. This was mostly done via digital platforms such as crowd-funding sites.

When the investor community was divided by age in the IW Capital and Crowdfinders poll, the younger bracket of investors were more enthusiastic about putting their money into start-ups and existing businesses. 70% of those aged between 18 and 34 said they would consider investing in SMEs following the vote for Brexit.

In a regional comparison, those based in London said they were most likely to consider investing in SMEs. 68% of investors in the capital said they would be willing to support small and medium businesses via private investment.

By Phil Smith

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