The Coronavirus pandemic has had huge implications to the business world, from rigorous lockdown restrictions that saw many firms temporarily close their doors, to working from home – businesses all over the UK have been affected. Thankfully, there have been positive aspects to come from the period too. Increased consumer spending was brought about by the Eat Out to Help Out scheme initiated by Chancellor Rishi Sunak, and entirely new sectors – such as MedTech and PPE – have been born as a result.
The power of adaptation
The small business sector has had its share of ups and downs during the pandemic. Many have thankfully been able to adapt to the new way of working and have successfully launched online arms of their businesses, for example, to remain resilient.
IW Capital continued to support ambitious start-ups during the crisis. GPDQ is an on-demand doctor service that had great growth opportunity and potential during the lockdown period. The raise was met with enthusiasm from IW Capital’s investor base, as the firm had a structure in place to navigate the crisis, and cater to the increased demand created in the MedTech sector as consumers had less access to GPs in a face-to-face capacity.
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Transcend Packaging – who work with the likes of Starbucks to provide eco-friendly packaging – saw success during the pandemic too. Consumers and, in many cases, investors are now looking toward supporting a more ‘green’ agenda, and IW Capital also completed this raise during the pandemic.
It is clear then, that despite the current climate, there are a huge number of SMEs that have adapted quickly to the pandemic and the changes it has ushered in. Many are now primed to grow, create jobs and increase value for investors. There is huge volatility in markets at the moment, which is putting some investors off – but thinking long-term can offer a refreshing change of perspective.
Giving the sector a boost
Schemes such as the Enterprise Investment Scheme (EIS) will be more important than ever by offering investors a tax-efficient way to back small growth businesses, reducing risk and increasing the potential for returns on investment.
The last time that the Government-backed EIS was extended, it resulted in a significant jump in private investment into small businesses. Replicating this effect with new, or increased, incentives would provide a much-needed boost to a section of the economy that is most in need.
There are fantastic businesses across the country with a huge amount of growth potential that may be slipping through the net if they do not receive vital growth funding when they need it. Private investors need to come together to encourage the government to make EIS funding more accessible to small business owners, across all industries.
The importance of investment
Investment in this sector will also be key to encouraging economic growth, with the SME arena historically employing around half of the private sector workforce and accounting for 99% of all businesses. The success of small businesses is so important to the economy; with an economic contribution of over £2tn, the success of the UK economy as a whole may hinge on the prosperity of SMEs, start-ups and high-growth firms.
Written by Luke Davis, CEO at IW Capital