Bure Valley Group is an investment introducer platform which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.
The UK is a curious place for tech companies. On the one hand, the FTSE 100 notably lacks the kind of tech presence seen in other countries – particularly the USA, where the S&P 500 leans heavily towards the likes of Google, Facebook and Microsoft. Yet the UK is widely seen as a great place for tech startups to set up shop. Not only are there great funding opportunities but also the UK offers strong rule of law, the English language (great for global business) and also attractive tax schemes for investors such as EIS (the Enterprise Investment Scheme).
Here at Bure Valley Group, our team outlines in this article some of the great reasons to invest in small UK tech companies in 2021. Find out more about our EIS and other investment opportunities by visiting our portfolio page here. To enquire regarding our latest projects and funding, you can reach us via:
+44 160 334 0827
Small capital for starting
Imagine a startup comes to you for investment and they describe their business model to you, which requires huge sums for warehousing (to store products) and large staffing costs from the outset. For many sectors/industries this is the nature of the beast, which can put pressure on angel investors to put more money up front than they would like to. With small UK tech firms, however, starting costs are often very small. Since they deal in code and software, there are not usually big supply chains and manufacturing costs to factor in. As such, in the early years the main startup costs are likely to be concerned with staffing, intellectual property (IP) and other overheads such as office space. This can lead to lower funding requirements from investors, thus granting you greater flexibility and ability to diversify across many companies.
Suppose a small UK tech startup describes their digital product to you (e.g. marketing software for agencies) and you are convinced it could potentially sell to 1,000s of customers. Should the business achieve this, it should not need to expand its team (and office space) to meet this higher demand. 100s of new employees are not needed to manufacture more physical products and the company may only require a few dozen extra support staff to assist customers. As such, small tech firms are often highly scalable – presenting attractive growth prospects for investors.
High diversification potential
Tech dominates almost all areas of our lives today, and has huge potential to keep penetrating spheres of life with new solutions to old problems. Even other industries and sectors defined as “non-tech” are now built heavily on tech innovations such as cloud computing, allowing the likes of universities and construction companies to store, access and process data efficiently. This presents a wide range of opportunities for investors to diversify their tech portfolio across the likes of legal tech, fintech, biotech, agritech and countless others.
UK tech hubs
It’s crucial to not forget the favourable political and economic environment which the UK offers to small UK tech firms – despite the challenges of recent years. Across the country, numerous “tech hubs” have emerged, nurturing a thriving tech ecosystem often in partnership with the academic world and other influential partners. This favourable landscape allows tech startups to rub shoulders and learn from each other, increasing their prospects for success. Of course, there is the ‘golden triangle’ of London, Oxford and Cambridge, but other cities such as Bristol, Edinburgh, Manchester and Liverpool are also gaining reputations as great tech hubs.
Small UK “funding gap”
Startups can often struggle past the “chasm of death” where a company can choke due to lack of funding – i.e. between the first stage of seed funding (helped by friends and family) to Series A. This is the stage where a small tech company might collapse since they do not have the revenues to attract the attention of venture capitalists, private equity and institutional funds. In the UK, however, various tax relief schemes exist to help tech companies through this difficult stage of their development – giving them a “leg up” to success. One of the best ones is the EIS, which has attracted £1.5bn-£2bn of funding each year and provided benefits to investors such as loss relief and income tax relief to investors too. Many international investors look at the UK with jealousy in this respect, and resident investors here should take advantage of their position.
Conclusion & invitation
Small UK tech companies are in a great environment to grow and offer promising returns to startup investors. You just need to know where to look. Here at Bure Valley Group, we offer an exclusive network of projects such as these to experienced and sophisticated UK investors. The opportunity you are seeking for your portfolio could be waiting for you right here!
Interested in finding out more about the exciting startup projects we have on offer to investors here at Bure Valley Group? Get in touch today to start a conversation with our team and discuss some of the great investment memorandums we have available here:
+44 160 334 0827