Funding and investment options need to be clearer, urge tech leaders
Funding and investment options are available to Leeds technology businesses but companies offering such opportunities need to understand the nuances of the sector in the region, according to a group of leading businesses.
Availability of funding to enable technology businesses in the region to grow, invest and thrive was a central point of debate in TheBusinessDesk technology roundtable sponsored by Garbutt + Elliott and Progeny Law.
Simon Palmer, a partner at Garbutt + Elliott, said: “The funding industry has come to Leeds.”
However, he did caveat that with he felt it was still too “London-based” for the sheer number of technology business flourishing in Leeds which was making it a hub of activity for start-ups and scale-ups in the industry.
Although Paul Hallett, co-founder of Vet-AI, disagreed, adding: “If it has come to Leeds I do not know about it. We are in the process of investment and we have had 25 institutions from London approach us, but not one from this region. I do not know where the money is – I am not talking the low angel level, but the £2m to £10m pots.”
He added that it was important that access to funding was available for fast-growing technology firms at all stages of their formation and operation. Hallett felt that there was perhaps a lack of understanding at what stages technology businesses would and could benefit from investment and that it was also about the lack of choice in the marketplace in Leeds.
This revealed itself as a dilemma of somehow squaring the funding circle by promoting the opportunities in the region and connecting this to the finance – a point that that would reoccur in the debate.
For Gav Winter, CEO of Rapidspike, the solution was about Leeds raising its game and shouting louder on the
investment front. He said: “I think [investment and funding] companies in Leeds need to do a better job. The fact is we do not need to just talk to London organisations. And I see them – in London – not really connecting with the Leeds scene and understanding it.’
Though James Gupta, founder and CEO of Synap, noted the regional funding environment has improved greatly in the region. “When you look at where we were three years ago, it is totally different from where we are today,” he said.
He then qualified this upbeat message with one that noted there was a need for a greater understanding of funding and funding models in the region. He added: “There is still an education piece to be done about high net worth individuals in Leeds, because there are plenty of people who want to make angel investments and get involved. But they don’t necessarily know how software works.”
Sarah Tulip, director of operations at Software Cloud, said she and others in the sector were on the case. She added: “We have a meeting coming up to pull together different investment throughout the city and make it accessible to everybody.”
Palmer gave a good and solid example of investment coming to Leeds, adding: “There are a lot more equity funds coming to Leeds. ESM Investments for example, the Stirling-based firm, have come to Leeds and set-up a £60m equity fund and only want to speak to B2B software companies.”
David Brennan, Nexus Vehicle Rental CEO, revealed that last year he presented to 27 UK and European banks based in London. “In the private equity market there is a huge amount of money that cannot invest fast enough because there are not enough businesses. So there is huge amount of money out there.”
But Brennan noted that Leeds should take a greater share of this money. “More and more private equity firms are moving to Leeds – as are advisors. The role here is for the advisory firms in Leeds to know where the pots of money are depending of the stage of business. There is a huge amount of opportunity in the Leeds market. You just need to know who to go to and advisory firms need to
have a good idea who wants to invest the money and who is up for getting it.”
Charlotte Bailey, operations director at Panintelligence, said for companies wanting the funding, the approach is simple: “It is about relationship building. It is not just about the proposition. It is who do we know – who are they partnered with.
“Without the business partners, I think we would have found the process quite difficult.”