Commissioned by the Greater London Authority
This research was commissioned by the Greater London Authority (GLA) in 2013, to establish the main gaps in SME finance currently in London and assist the GLA and London Enterprise Panel in the development of a new SME finance programme utilising £25m from the Growing Places Fund.
The research, undertaken by CEEDR and SQW, took place in August 2013 and involved a comprehensive review of the most current SME finance data pertaining to London and the wider UK economy, a series of interviews with key debt and equity finance providers in London and a small number of case study business interviews.
The key findings from the research demonstrated that London is markedly different from the rest of the UK. SMEs in London exhibited greater churn than elsewhere, with very high start-up and failure rates and a higher proportion of young high growth businesses. London's Tech City was highlighted as a boom area for young high growth businesses. However, whilst London is a centre for financial institutions and is better served than the rest of the UK, particularly in equity risk finance, the study revealed a number of finance gaps. The main finance gaps were in start-up and early stage debt finance, mezzanine finance for more established business restructuring and lower growth SMEs and a range of equity finance from small-scale early stage investment through to larger-scale follow-on finance.
The report recommended that the GLA could add greatest value to the London and wider UK economy by developing a flexible equity fund to support London's young high growth businesses and encourage greater private equity investment activity through co-funding arrangements.