The latest results show 69% expect access to external capital to be difficult over the next 12 months, with 22% expecting it to be ‘very hard’ to secure.Only 6% expect it to be easy to source.
The findings are based on research with 48 of the country’s leading entrepreneurs, whose businesses have a combined annual turnover of £2.6 billion or an average of £54 million each. 1
As a reflection of the perceived difficulty in securing funds, the research reveals that in terms of sources of capital entrepreneurs intend to access over the next 12 months, 79% are looking to use retained earnings and only 57% plan to rely on bank loans and overdrafts.
The next two major sources of capital they intend to use are invoice discounting or asset based lending (28%), and raising funds through venture capital or private equity firms (23%). However, 6% claim that they will have to sell part of their operations to raise funds, and 2% will use their credit cards, with the same percentage planning to rely on friends, family and associates.
Percentage of entrepreneurs interviewed who said that they would use this source over the next 12 months
- Retained earnings: 79%
- Bank loan/overdraft: 57%
- Invoice discounting/asset based lending (excluding leasing): 28%
- Raise equity from a venture capitalist/private equity firm: 23%
- Cost savings in businesses/working capital: 21%
- Lease assets:17%
- Mezzanine finance:13%
- Raise equity through public markets: 6%
- Sell assets/divisions/subsidiaries: 6%
- Raise equity from ‘angels': 4%
- Credit cards: 2%
- Raise equity from friends, family or associates: 2%
Ed Cottrell, Investec said:
"Many successful entrepreneurs are looking to grow their businesses over the next 12 months and as part of this employ more people. Indeed, our findings show that 75% are considering launching new ventures over the next 12 months.
"Clearly, as many believe that access to capital is going to remain difficult for the next year or so, many are looking to use retained earnings or extract funds from their existing operations through selling part of them, for example. Alternative sources of finance including mezzanine finance and asset based lending are also proving attractive, which is a key reason why over the past 12 months, we have dramatically increased the amount of money we have lent to successful entrepreneurs. We will continue to support as many as possible moving forward."
The Investec Entrepreneur Confidence Index (‘the Index’) was launched in December 2009 and is updated twice a year.
