What Next For Startup Loans? UK Funding Scheme For Entrepreneurs Hits Its Stride
Launched in 2012, the scheme provides startup loans, repayable between one and five years, business support, and mentors to entrepreneurs through a national network of delivery partners (DPs).
To date it has helped 27,000 new businesses get off the ground. All well and good, but how have these fledgling enterprises fared since? Are they still trading? Have they successfully moved on to next stage growth? Or have most of them bombed?
In fact, somewhere between 10% and 15% of SUL businesses have ceased trading, Joanna Hill, COO of the Start Up Loans Company, which runs the scheme, told me, which compares favourably with the national average of around 50% of small businesses failing in the first two years.
“Inevitably, some businesses will fail given the inherent risk in starting any business venture,’ she says. “However SUL businesses that have ceased trading are not an entirely fruitless exercise. Feedback shows that many of these loan recipients learned vital lessons and skills from the experience and stand better equipped for any future business ventures.”
Flying in their second year: the Yucoco team
Intrigued to know their fate, I recently caught up with them again, and found them still on a steep learning curve, but heading in the right direction.
They recently became the first ever crowd funded competition winners, and receiving £75,000 in funding from Worth Capital and Seedrs. And while Yucoco is still very much an online business, the team are in discussions with Harrods and Selfridges about launching in-store products.
Their DP continues to play a key role in supporting business growth.
Co-founder Sophie Frost said: “Virgin StartUp helped connect us with Virgin Balloons and Virgin Trains to talk about adding Yucoco to their list of suppliers. And in terms of next stage funding, they have put me in touch with Enterprise Nation, a startup platform that offers advice and support for new business.”
She insists, however, that outside the scheme there is a pressing need for advice around next stage funding.
She says: “During our fund raising round we had to use Google GOOGL +0.68% to work out where to find angel investors and people who would be interested in backing us. Any business that launches on £10,000 to £25,000 of funding is likely to need more investment pretty quickly.”
Attracting sufficient revenue to make the business pay, finding new revenue streams and routes to market are just some of the challenges that these growing businesses face.
Virgin StartUp CEO Mei Shui says: “As they move into the next phase of growth, we target the support to address very specific challenges, for example, doing business with big business, how to get in front of the right person, how to pitch to a buyer, etc. They might need help with IT, SEO, or marketing; the support will be there, but it will be more specialised.”
Initially the Start Up Loan scheme attracted a lot of scepticism. ‘Suddenly everyone is an entrepreneurs,’ was a frequent comment. As the scheme matured and flourished, cynics turned their attention to long term viability? ‘What happens to the businesses when their SUL contract ends?’
Plenty, it seems.
The 27,000 new businesses launched through the scheme have created 37,000 new jobs. And they’ve done their bit for the UK’s economic recovery. For every £1 invested in the scheme, £2.86 is returned to Government.
But to see where this scheme really comes into its own, look no further than T J Lyons.
Thrown out of school aged 15 with no qualifications, written off by his teachers and told he wouldn’t amount to anything, the young Londoner used a £10,000 SUL to start his own timber company.
Last year he launched Thomas James Development, a construction management firm that handles a range of building contracts, and hands them on to teams of sub contractors.
“With that loan I was able to buy the equipment that allowed me to diversify. The contacts I then made from the larger fencing contracts then allowed me to move into other things,” says Lyons.
BizBritain, the DP that worked with Lyons, is also committed to a strategy of continued support for the entrepreneurs on its books. To date it has helped around 450 entrepreneurs set up.
CEO and founder Matt Gubba said: “We stay in close contact with them and continue to provide advice and practical support, through webinars and workshops, on the issues and challenges they face as their businesses grow. Some have enjoyed huge success, hitting six figure turnovers, and expanding overseas. Without SUL, a lot of business opportunities would have been missed.”
More at:http://www.forbes.com/sites/alisoncoleman/2015/05/07/what-next-for-startup-loans-uk-funding-scheme-for-entrepreneurs-hits-its-stride/
