Foreign investment offers big opportunities for British high growth firms, Barclays report

Brexit: UK to see increase in foreign investment says analyst

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The Trading Places findings, from Barclays and data platform Beauhurst, show the opportunities for this sector and firms’ plans to tap deeper into international markets as they look to bounce back from the pandemic. Nearly half of the total equity investment in high growth firms over the past four years was funded by deals with at least one foreign investor. Since 2011, 36 per cent of deals involving foreign investors were for companies raising their first round of equity.

The report, which includes data from Beauhurst’s network of over 36,000 high growth UK companies, also shows a boom in US investment. Over the past decade, the annual value of these deals has grown by more than 620 percent, amounting to £4.5 billion in 2020. 

Equity investment into software companies (software as a service), was the most popular among international investors between 2011 and 2020 with internet platform, mobile app, and analytics companies following close behind.

One company that says it is seeing the benefits of international investment is Streetbees, an AI-driven consumer insights platform aiming to deliver the world’s first human intelligence platform. By capturing real life behaviour through people’s  words, photos and videos, the company enables brands to understand their lives, motivations and actions. 

CEO and founder Tugce Bulut explained: “Streetbees has always been internationally minded, with teams in the UK, US, France, Switzerland and China, but our Series B funding last year provided us with the resources we needed to really step up our global expansion as a leader in AI-driven tech.

barclays

Barclays is teaching start-ups the basics of raising institutional funding (Image: Getty)

“We’ve made huge increases to our US-based team, recruiting the best in the industry to join our New York office, which has enabled us to make our mark on the North American market.”

The Trading Places also explores investment into the UK from the EU post-Brexit and via Innovate UK grants. In 2019, the value of deals involving EU investors hit a high at £2.4 billion, showing the continued relevance of that relationship while Innovate UK gave £1.1 billion in grants to high growth firms in 2020. 

Katherine Morgan, Barclays head of high growth and entrepreneurs said: “More people are considering starting a business now than ever before, and it’s no surprise given the success of our home-grown entrepreneurs, many of whom have skilfully utilised international markets, generating new jobs and driving economic growth.  

“It’s clear from our customers that both the EU and the wider international markets are equally attractive when it comes to raising funds, tapping into talent and introducing their products overseas.   

“Their continued innovation and pragmatism will be vital as we recover from the economic damage that the pandemic has inflicted on the world.” 

The report’s recommendations to entrepreneurs and business leaders who are considering scaling their business include: 

·        Explore foreign investment – British entrepreneurs and business leaders should consider the funds and expertise that foreign investors can bring to the table, as these investors look to the UK to diversify their portfolios both geographically and sectorally

·        Tap into international talent – Those looking to start a new venture should consider the connections and experience that an international co-founder can bring

·        Consider foreign acquirers – US buyers were responsible for 40 per cent of the top 20 acquired companies by valuation over the last 10 years. Business leaders should consider adding some overseas buyers to long lists when weighing potential exits.

In September Barclays is running a Global Connect programme encouraging more high growth firms to learn about international markets. A group of firms will be heading virtually to San Francisco as part of an established four-week programme designed to teach start-ups the fundamentals of raising institutional funding. 

To find out more about Barclays support for high growth businesses visit: https://www.barclays.co.uk/business-banking/sectors/entrepreneurs/

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