It may be a truth universally acknowledged that the London economy is growing far faster than the UK economy, powered mostly by its small and medium-sized companies. But, in reality, research shows that only a small minority of those SMEs actually grow.
In order to look meaningfully at the capital’s economic growth, it’s no use simply lumping all SMEs together. Rather, we should really be looking at the 'New and Growing Companies' (NGCs) that are leading the world in terms of economic recovery.
So, how much do we really know about London’s NGCs? What is their economic impact on the London economy? And, most importantly for both lenders and borrowers, which factors promote and hold back growth?
As part of this investigation, Workspace Group, home to thousands of new and growing companies in business centres across London, is organising a NGC Forum to discuss those key questions. The event, which will take place on the 13th of January at the Houses of Parliament, and will be hosted by the Small Business Ambassador for London, the MP Mary McLeod, will be attended by key figures from the business and political community.
We'll be looking at NGCs and their access to finance from all angles. Speakers, from various disciplines and sectors, will include entrepreneurs, incubators, alternative finance providers, journalists and MPs. Steve Folwell at LOVESPACE UK (profiled here) and Emma Obanye from BuddyBounce (profiled here), both customers of Workspace, will be representing NGCs based at Workspace while Alice Bentinck, founder of the incubator Entrepreneur First based at Club Workspace London Bridge, will be giving us an insight into the startup perspective. There will be those from the alternative finance world, including Louise Beaumont, founder of Platform Black and now Head of Public Affairs and Marketing at GLI Finance; Chris Dines, who heads up the AFN team at Knowledge Peers, and Andy Davis the former FT Weekend editor who specialises in investment.
As we ask how London’s NGCs are obtaining finance and using technology to drive the national economy forward, it is clear that NGCs have to be fluid, responsive and proactive in today’s environment.
At the moment, 90% of SME lending is dominated by four banks who are less able - or willing - to lend. And as we shift to a world where there are more companies with lower assets, the fact that traditional sources of finance are uneasy about unsecured lending to small businesses based on cash flow is becoming more of a problem. So, can traditional finance adapt? Banks are trying to engage with alternative finance models, or even copying them. But is this part of the solution?
Perhaps the question we really have to ask ourselves is whether the shortage of cash on offer is actually the problem? Perhaps, what’s needed is more of a focus on matching the type of finance to a business’s needs. And, making sure NGCs have the awareness, training and support required to utilise these new forms of funding that have embrace technology and upped the speed of decision making. Raising awareness of different forms of finance is particularly relevant in light of Knowledge Peers and Workspace's recent collaboration on Informed Funding, a new platform which allows businesses to find out more about the broad range of funding options available to them.