Our technology sector has seen £28bn worth of investment since 2011, the largest sum in the EU when compared to France (£11bn) and Germany (£9.3bn). In fact, the digital economy is growing at twice the rate of the UK economy, contributing £97bn per year, presenting people with some interesting business opportunities.
Four unicorns (startups valued in excess of $1bn) completed public offerings in the second quarter of 2017 – a number which is equal to the amount of IPOs completed in 2015 and 2016 combined.
With some of the areas seeing the most investment including fintech, mobile, robotics, drones and software as a service, the digital and tech industry is booming. But there’s plenty of investment opportunities elsewhere too.
For example, the film industry has raised £200m under the Enterprise Investment Scheme (EIS) – set up in the early 1990s by the government – in the past 12 months. And as it is backed by the film production tax credit, it also provides 20 per cent back in costs to filmmakers through a rebate system. A growing investment sector under EIS, it proved to be one of the most popular in the scheme last year.
The film industry is one which is enthusing, yet others should not be so easily dismissed because their offering is not as exciting.
Boring but successful
Even sectors which we perceive to be boring have products investors can get enthusiastic about – and present a great opportunity.
Mattresses aren’t an industry you would expect interest to be found; Eve Sleep raised £375,000 worth of investment in 2015 when valued at £819,000. Completing further valuations totalling £22m over the next two years, an IPO has just been completed with market capitalisation of £132m. Even some of the oldest products can garner large sums of investment – and you snooze you lose as they say.
Manufacturing is currently facing a six-year low in investment, despite the fact it accounts for ten per cent of the economy. With Brexit causing uncertainty across industries, it is the drop in sterling which has made exports more attractive – meaning investments are now more affordable to those who want to invest a low sum, and potentially see a large return.
Worth £8.2bn to the UK, the farming industry has also seen investment interest, and as an integral form of income to the economy it has become increasingly important that the UK remains a lead food exporter. As consumers become more health conscious, it has presented an opportunity for growth in the market as new products are launched in a bid to reach this type of consumer.
Since the nation’s decision to leave the EU, the car industry has faced a drop in interest. Investment in 2016 was 30 per cent lower than in 2015, as just £1.66bn was invested last year, with £2.5bn invested in 2015. The Society of Motor Manufacturers and Traders reported that figures from the first six months of the year have fallen – and if figures remain the same, spend in the industry would reach £644m for the year.
This number is a quarter of the amount which was invested two years ago. As new models for vehicle ownership become available and modes of travel, such as Uber and Lyft, challenge how people travel – the industry is ripe for investment.
Invest with security
All investments present risk, but the Seed Enterprise Investment Scheme (SEIS) aims to mitigate the risks associated with startup and early-stage investment. Established in 2012, it provides funding for entrepreneurs who are keen to prove their business proposition and get their business up and running.
Allowing an organisation to raise its first £150,000 of equity investment, investors can receive income tax relief of 50 per cent – halving the risk once an investment is made. Other tax reliefs include: capital gains tax, inheritance tax, and loss relief should an investment fail.
Providing businesses with a way to raise much needed capital to create investment proof points in the future, SEIS also provides investors with some financial security when investing in high-risk early stage organisations.
Matthew Cushen is an innovation consultant, entrepreneur and successful angel investor. He is co-founder of Worth Capital