24th November 2020

A year of hope and positivity on the horizon for investment and UK businesses says IW Capital

Investors now look to back COVID-class assets and UK business in a resurgence of the British economy.
Luke Davis, CEO of IW Capital, comments on the success of the vaccines and how they are impacting investing in the UK:

"The past few weeks have provided hope and optimism that the end of the pandemic is finally in sight. Two vaccines have been shown to be over 90% effective and preliminary results for the Oxford vaccine– f which the UK has pre-ordered some 100 million doses–are showing it to be 70% effective and up to 90%. This has led the FTSE 100 into strongly positive territory in November as investors get their confidence back.

The private sector is as important as any government scheme to fight the impact of the pandemic. Investors are seeing this as an opportunity for growth and are therefore changing their sentiment, with 27% now looking to invest in sectors created by the COVID-19 pandemic, such as PPE and social distancing equipment. In addition to this, 44% of investors are now looking to back UK-based companies rather than global firms.

This shows great promise as we head into the new year, with such investment assisting in the growth of news businesses. With a 12% increase in new businesses starting up during 2020 compared to 2019, 2021 is set to create some exciting investment opportunities for investors throughout the country and some that are sure to boost the British economy.
Private capital has proven to be fundamental in helping UK businesses grow and flourish post-pandemic, and will be a welcomed sight for many SMEs throughout the country. The news of the vaccine’s success is sure to bring investment flowing back into SME’s and start-ups which is key for the resurgence of the UK economy, with the SME community making up 99.9% of private sector businesses.

The overall effect of this period has given promise to investors, leading them to reconsider what they are doing with their investable assets. To understand this shift, SME investment specialist IW Capital has conducted nationally representative research to uncover the sentiments of the UK's investors.

Key Statistics are:
-44% of investors are now looking to back UK-based companies rather than global firms- 9,629,000
-45% of investors feel their ‘risk-appetite’ has increased due to COVID-19, as traditionally safe investments in big companies are no longer viable–6,942,000
-27% of investors are looking to invest in sectors created by the COVID-19 pandemic, such as PPE, social distancing equipment and virtual solutions–5,674,000
-19% of investors believe the coronavirus pandemic has opened more investment opportunities than it has closed– 6,278,000.

The success of these vaccines is a welcomed sight for investors who now see an opportunity for growth. Such great news brings optimism for both investors and small businesses alike, with the fourth quarter looking stronger and early 2021 now looking promising.

It’s truly positive to see an increase in new businesses compared to last year even with the uncertainty and limitations that the pandemic has produced. With more and more people looking to start their own businesses, private capital is proving to be crucial and with the new year bringing hope to investors, we should start to see these new businesses flourish.

Investors are now looking to back Covid-class assets and small UK businesses over global firms, which truly is great news for SMEs and small business owners throughout the nation. Such use of private capital is sure to see growth for many SMEs, with now being a key time for investment. This demonstrates the sentiment that already exists to help get the UK economy back on its feet and once again a hub for business.

IW have made a number of investments in the sector, including a firm that pivoted to make PPE and an online doctor solution. After an initial period of fear and uncertainty the opportunities started to arise and investors have looked to back them, especially across the UK and outside London.

Making growth investment more easily available to small businesses that are looking to grow should be a priority. The last time that the Government-backed EIS was extended, it resulted in a significant jump in private investment into small businesses. Replicating this effect with new, or increased, incentives would provide a much needed boost to a section of the economy that is most in need, and so we hope this will be addressed in the near future.”

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