After two years of negotiations, we don't seem any nearer to a Brexit deal and although it's the eleventh hour, uncertainty still reigns. Will there be an offer, no deal, a referendum, an over-all election-? Who knows?
All this uncertainty is pretty much the more severe thing for investors. The markets can't stand it either, whether currency or equity. So can any positivity at all be gleaned from this Brexit black hole? Or perhaps is everything simply doom and gloom?
To find out, let's look at some figures- no, really, come back!
We actually have 5.7 million SMEs in the UK, which makes the country a hot location for start-ups, with or without Brexit.
The Centre of Entrepreneurs announced recently that this past year was the biggest ever for start-ups with over 600,000 launching. Now that's got to become a positive – and I'm sure it surprises many people considering the climate. This is particularly great news around the employment and revenue front as the UK's SMEs employ 99% of people, and convey 61% of turnover – that's more than the FTSE 100. That's a major contribution towards the UK economy and something that appears to be growing, even in the cisco kid of Brexit.
Investors must surely be getting cold feet, though not according to the stats. Some lb8.7 billion was committed to SMEs in the UK in 2022. The figure for 2022 will probably be slightly lower, but we're still at a high watermark, showing Brexit is not stopping these deals coming through. And what's really interesting would be that the year before, whenever we proclaimed we'd be leaving the EU, the figure was half this, which clearly didn't dent investor confidence. Meanwhile, foreign investment totalled over lb5 billion, which is pretty bullish.
In 2022, there was a 79% rise in private equity finance adopted by SMEs, according to the British Business Bank. This implies that increasingly more information mill looking for private equity funding. This can be a sign that the UK remains 'very' open for business and SMEs are raising more income than they ever have done – and it doesn't seem like this really is going to stop in the near future.
On the startup front, lb175 million was raised in the Government's SEIS initiative last year, while a whopping lb1.8 billion was raised through EIS, the 2nd highest fundraising year ever – so this initiative that aims they are driving investment in high-growth tech startups is constantly on the garner support and remains very important.
These schemes counterbalance the the risk of purchasing high-growth startups by offering higher rate tax payers 50% tax relief on investments as much as lb100,000 and 30% tax relief on investments as much as lb2 million . In addition, investors can gain even more by selecting portfolios offering tax carry back for those that invest before 5 April, that is particularly important for investors who are self-employed.
Those investors that do not think they're obtaining a good deal through SEIS and EIS should think about the two schemes where recently benchmarked because the best two tax incentive investment initiatives in the EU. Actually, the federal government gets lots of enquiries from countries across Europe and beyond seeking to replicate them.
The UK's not only a hot bed of great high-growth tech startups with unrivalled tax incentives to purchase them, but also the companies themselves are very optimistic. Some 74% of SMEs expect revenue to grow more than 20% within the the coming year, that is reassuringly bullish. Meanwhile, 24% expect increased productivity, even in the face area of Brexit.
Feeling more optimistic?
Put simply, there has never been a much better time to purchase exciting high-growth tech startups when it comes to choice, confidence, growth potential and risk.