There are more than 1.5 million "digital tech" jobs in the UK, and the sector is said to be growing faster in terms of turnover and productivity than the wider economy, but a survey by LDF has found 47% of IT companies do not believe UK banks are business friendly, with 56% saying funding or insufficient capital was the biggest difficulty when starting up their business.
In a recent interview with the BBC, Rohan Silva, a tech entrepreneur and former adviser to the government, says funding for start-ups has "long been seen as a big problem in the UK".
"There's two types of funding. There's the funding that comes from friends, family and fools: the start-up money - £50,000, £100,000 - to get going. There we've really made a big difference in the UK. We've created the world's most generous tax breaks for that kind of investment."
This view is borne out by the LDF Survey, which found that 47.5% of tech start-ups used Savings to fund the start of their businesses, with 25% using money from Friends and Family.
However, it is the second type of funding that Rohan Silva calls "scale-up cash" to help companies grow, which is still proving "a big challenge".
Leading fund manager Neil Woodford admitted, "We have been appallingly bad at giving those minnows the long-term capital they need."
This comes at a time of uncertainty in the IT market with most major analysts predicting the UK IT market to shrink following the Brexit vote:
Forrester defend their forecast for two reasons - firstly we are already halfway through 2016 and secondly they believe that large sections of the IT market will remain unaffected. However, there is still uncertainty as Jeremy Davies, co-founder of Context explained, "We are rudderless at the moment...We probably won't see a tangible effect for a good couple of months, or even into the fourth quarter."
The LDF survey found that 34.5% of Tech companies are worried or have been worried about cash flow and 20% have gone without pay due to cash flow problems.
So what funding is available for UK Tech companies?
At LDF, we have created a Business Development Loan that helps Technology businesses to drive growth by financing key development costs. It can help you to cover a wide range of costs, including, but not exclusive to:
Our short-term loans can also help cover recurring business expenses such as Corporation Tax and VAT that then allows for investment into other areas of a technology business.
Helping Technology Firms do Business
Outside of direct funding, LDF also partners with Technology and IT Equipment suppliers to help them grow by offering an asset finance solution to their clients.
The LDF Partner Programme enables Technology suppliers to increase sales, improve cash flow and speed up the sales cycle by offering an asset finance solution to their customers. It reduces the need to discount, while encouraging more inbound leads by making the equipment more affordable for customers.
We will shortly be launching a new Technology Leasing solution, specifically designed for technology companies to overcome the uncertainty left in the marketplace by major technology leasing providers withdrawing from the market.
Are you a technology company? Call us today on 01244 525410 to discuss the many different ways LDF can work with you to help your business grow. Alternatvely you can apply for finance or learn more about our Partner Programme.
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