New findings from YFM Equity Partners’ inaugural Entrepreneur Economy report, a study of the 1.1 million entrepreneurial SMEs in the UK, reveal that 8% of the nations’ entrepreneurial SMEs are based in the East Midlands, contributing £82 billion to the UK economy.
Entrepreneurial SMEs in the East Midlands are eager to scale up
Analysis by YFM Equity Partners and the Centre for Economics and Business Research (Cebr) found that the East Midlands leads the UK in entrepreneurial SMEs using venture capital trusts to grow, with 16% of such businesses in the region relying on this funding source, compared to a national average of 13%.
Many East Midlands entrepreneurs have also turned to private equity to access funding, with over a quarter (27%) of founders taking this route.
Finding the right investor remains a key challenge
However, the report also highlighted the difficulties that entrepreneurial SMEs in the East Midlands had in raising investment, especially in comparison to SMEs elsewhere in the country. 37% said they found it hard to find the right investor, compared to 29% nationally.
East Midlands entrepreneurial SMEs were also among the most likely (33%) to state they faced a lack of clarity on the best funding options for their businesses.
Spotlight on regional success: Leicester
One particular East Midlands success story is the city of Leicester, which ranks ninth in the UK for entrepreneurialism and has the sixth highest ‘business to people ratio’: 6,057 businesses per 100,000 people.
Leicester also boasts the eighth highest rate of new businesses founded between 2022 and 2023, with 607 businesses launched during that time period.
Stephen Murray, investment director, YFM Equity Partners, said: “The East Midlands Entrepreneur Economy has great deal of potential. But, our report has pinpointed several barriers keeping local founders from scaling up their businesses.
“Although it’s positive to see that many regional entrepreneurs rely on venture capital and private equity for funding, there are still severe struggles identifying the right investor and accessing the most suitable option for them.
“It’s therefore of outmost importance that there is sufficient guidance and information available for them to make an informed decision based on their needs.
“Receiving the right financial support is vital in the survival of the region’s businesses but it won’t be possible without improving access to professional capital.”
