Leadership & Productivity

Don’t be afraid to pitch to international investors

4 min read

12 December 2017

Former special projects journalist

Entrepreneurs and business owners in search of growth capital should look beyond their native shores and to international investors, new research has suggested.

The UK economy has witnessed profound change over the last year or so, and some business owners may be biding their time before pitching to investors. Despite this fragility, international investors think highly of UK scale-up companies.

In the UK’s current uncertain economic future, you could be forgiven for thinking that international investors wouldn’t want anything to do with British business.

Brexit looms large, and we’re still no further in real terms to understanding what trade will look like in the near future between the UK and the rest of the world, the EU in particular.

However, as we have explored in a previous article in this series, Brexit doesn’t mean bad news all round. Some businesses have already seen some benefits – for example, while a weak pound is bad news for anyone importing goods, exporters have found themselves suddenly more competitive in the global playing field.

Overall, according to a recent survey by Innovate UK, international investors look favourably upon UK scale-ups. In fact, 47 per cent of investors surveyed said the UK scale-ups were a more attractive prospect than those in other countries.

There were two main reasons cited for the attractiveness of the UK – the relatively advanced innovation ecosystem in the UK, and a perceived superior management team quality.

The investors were kept anonymous for the purposes of the survey.

Here’s what the investors had to say:

Pros

• It’s a very advanced eco-system and as a UK-based company the language is English and that’s certainly helpful. It is the international language
• Language proficiency, good business environment, logical tax and legal regulations and rules
• They are demonstrating more marketing capacity and are good negotiators
• There is less exit risk and less management team risk
• It’s a melting pot of people from all over the world so you will find access to good talent
• In the UK you see a lot of technology which is attractive to our company

Cons

• We are less comfortable with UK regulations, tax issues and tend not to go where there is red tape
• In the UK and Europe in general there is not the full access to entrepreneurial skills in terms of legal advice, accountants and stages for capital access that we have in the US

In the survey, 17 per cent of investors said UK scale-ups were much more attractive than those from other countries. A further 30 per cent said they were somewhat more attractive, and 33 per cent said they were about the same as those from other countries. Only ten per cent said UK scale-ups were less attractive, and ten per cent said they didn’t know.

The ones that believe the UK is less attractive as an investment cited Brexit, and a perception that the UK (and Europe) is not as business-friendly as the US. Well, you can’t win them all.

On the whole, the overall picture is overwhelmingly positive. Businesses should certainly not be shying away from approaching international investors.

If a business owners sees an investor that could be just right for their business, it doesn’t hurt to get in touch – they may find they are well disposed to investing in the UK.

This article is part of a wider campaign called the Scale-up Hub, a section of Real Business that provides essential advice and inspiration on taking your business to the next level. It’s produced in association with webexpenses and webonboarding, a fast-growing global organisation that provides cloud-based software services that automate expenses management and streamline the employee onboarding process.