Telling the truth about SME life today

George Osborne’s creative sector snub is £76.9bn opportunity for private UK investors

The Autumn Statement 2015 drew attention to an economic reality: although funding to culture was not as drastically affected as some expected, the UK creative economy still faces a constant battle for funding and support, even though the sector accounts for ten per cent of the UKs economy and employs 2.6m people.

Private investors should see this as an opportunity to support the UKs creative industries, to plug the growing funding gap and to realise potentially excellent investment returns in some truly outstanding creative enterprises.

There are nearly 160,000 creative industries businesses in Britain, characterised by a high degree of entrepreneurial flair. Yet, despite this being a high growth sector, many of them still find it difficult to attract adequate capital to maximise their potential.

The UKs creative industries the vast majority of them innovative and fast growing SMEs enable Britain to enjoy a position of strength on the global stage.

These businesses create and deploy intellectual property in sectors such as television, radio, computer games, music, advertising, fashion the list goes on. There is no limit to the value these companies can achieve thanks to the scalable revenues generated by their business model.

Put simply, these small businesses with a low cost base can typically produce entertainment and media content at a local level but with the potential for global distribution and the opportunity for that content to be sold many times over.

And technology plays a large part; take for example, Mirriad, which uses patented computer vision technology to digitally insert advertising into visual media at the point of transmission. Fixed costs are low and think of the scale of content that it can be applied to whether thats classic films from the 1930s or tailoring the latest James Bond to a different geography.

There is no doubt this is one of the UKs most exciting, high-growth, and promising sectors. The creative economy is worth 76.9bn, representing 8.7 per cent of all UK exports and there is a real drive to double UK creative exports by 2020.

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This is already well underway one of the deals signed during the Chinese president’s visit in October allows for the broadcast of BBCs Sherlock Christmas episode in Chinese cinemas. And it’s not just about exporting ideas and innovation. Giving the sector more attention will attract inward investment.

The creative industries are learning to overcome their British reserve and shout about the achievements and pioneering advances from film to 3D printing in architecture. The UK is one of only three countries in the world (along with the US and Sweden) to be a net exporter of music.

The Grand Theft Auto series has topped well over 100m sales and was created by Rockstar North in Edinburgh. Hollywood too is coming to rely on UK studios, with blockbusters including Gravity and HBO series Game of Thrones both owing their special effects to British designers.

The skills a British Oscar-winning creative studio looks for in employees

It comes as no surprise therefore, that the Chancellor of the Exchequer has said that Britain punches above its weight when it comes to the creative industries.

Sadly, this gold standard of innovation has been overlooked as an opportunity for the UK to deploy a significant amount of soft power and influence, through media, culture, and entrepreneurial success globally.

Despite its undeniable scale and reach, the industry faces a constant battle for funding; but that may be about to change. Private investors are starting to see spending cuts and tax incentives as an opportunity to get behind the UKs creative industries to plug the growing funding gap and to realise potentially outstanding investment returns in some truly incredible creative enterprises.

Helping creative businesses grow is not just about financing. By their nature, many of these companies may start with a small number of employees, and a high degree of entrepreneurial flair which needs to me harnessed and supported.

Growth companies are seeking out investors and financial partners with authority and depth of knowledge of the sector to provide crucial mentoring resources to stimulate growth and innovation at these firms.

A lot of creative SMEs need connections to create networks, refine their skills, and adopt new business models to put their innovative ideas to work. Private investors with experience in the sector can provide just that and help them thrive.

Importantly, the business community is starting to realise that the sector is not just the territory of high risk angel investors. Quite the opposite, in fact, it has emerged that the failure rate of creative industries startups is far below that of tech and other sectors.

Now is the time for businesses, entrepreneurs, and investors to mobilise the necessary capital to make Britain a global hub for the creative industries and fuel further growth.

UK culture, from Downton Abbey to record-breaking apps, and the unique creativity which propels it, is one of the defining characteristics of today’s Britain.

We should be fiercely proud of our creative industries, revel in the contribution that they make to UK and the global economies, and support the best and brightest talents and ideas across the industry to help them maximise their dazzling potential.

David Glick is the CEO at creative VC firm Edge Investments



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