Mid-sized tech companies are struggling to secure vital funding, with access to finance still being the biggest barrier to growth for half (45%) of firms, says a report published today by accountancy and business advisory firm BDO LLP in the East Midlands.
According to the BDO report, medium-sized tech and media companies have become the squeezed middle of the sector, by missing out on the ‘rags to riches’ appeal of start-ups and failing to have the multi-billion pound pull of tech giants.
Interestingly a third (33%) of bosses believe the valuation hype – and subsequent share price volatility – of the world’s leading tech firms such as Facebook and Twitter has unfairly made some investors wary of the sector.
They also blame a general lack of understanding from lenders (55%) and an inability to explain how a new product might generate revenue (40%).
However venture capitalists, private equity investors and alternative funders say they are “crying out” for opportunities and urge medium-sized tech firms to come forward.
Rick Wilson, partner at BDO LLP in the East Midlands, said: “It is concerning that there is a perceived disconnect between the tech and finance community. Business leaders need to know where to turn for funding. Likewise, lenders need to know who’s hungry for growth.
“Medium-sized TMT businesses in the East Midlands currently generate £3.3bn in revenue and employ more than 22,500 people. This sector is big business for our region, but its growth potential is even bigger. If we want to create a market where mid-sized businesses can develop into global tech leaders in their own right, they need the right funding and support along the way.”
