Building a collaborative co-investor network for Wales' most ambitious entrepreneurs. #smartseedcapital #investmentfirepower
Last month I attended the launch event of Wale's SME Access to Finance Report, produced in partnership between the British Business Bank and the Development Bank of Wales' research arm, Economic Intelligence Wales. Lots of insights were discussed, but a key takeaway for me was many SME’s in Wales rely primarily on their credit cards as a form of funding, while equity investment seems less appealing. So I am wondering, why do SME’s choose expensive, short-term debt when they could opt for equity investment from a partner who could add real value and help grow their business? Most companies in Wales are Micro (meaning they employ 10 people or less) so are they just too busy to think about long-term growth? But does that also mean they are not thinking about their exit plan and therefore do not have pathway to a comfortable retirement? The Development Bank of Wales provides a variety of funding options, offering patient capital. As a business owner you can talk to your local relationship manager who will understand some of the challenges you are facing. https://lnkd.in/gNG4ciNz You can also read the full report here:- https://lnkd.in/gR3busgu #untappedpotential #businessgrowth #equityinvestment #successionplanning #exitplanning #happyretirement #financialfreedom
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6moAn answer may be in the detail... if you look at some of the terms that the Development Bank of Wales puts on term sheets / side letters with companies they invest in, it's not so surprising. Business owners in Wales also get a raw deal on the pricing of that equity, having to sell more equity for less, and having less equity to sell in future (also most likely at a lower price). I've attached an infographic that shows Wales founders get a raw deal when looking at equity finance locally.