Give and take
Innovation-led businesses and universities are harnessing the power of collaborative research and development by working together more closely to generate new commercial opportunities.
A growing number of companies across the country are tapping into the raw talent of graduates to generate new ideas. The breadth of solutions being pioneered by Knowledge Transfer Partnerships (KTPs) is wide-reaching, addressing global challenges such as food security, climate change and health. They also give students the commercial experience and skills they need to get their foot on the first rung of the career ladder.
Sector at a glance
- 8,500 KTPs between universities and businesses have been formed in the last decade
- £1.8 million – ploughed into R&D for every £1m of Government money invested in KTPs in 2013–14
- £89 million – new funding will be invested in the UK Catapult network to create innovative new technology
Public equity – permanent capital for business
Commentary by Tim Ward, CEO, The Quoted Companies Alliance
SMEs are the lifeline of the UK economy. They make a significant contribution to the UK’s economic output and are big job creators. As these businesses grow, they inevitably need capital and must weigh up various financing options. The fact of the matter is that most turn to some form of debt financing when faced with this choice.
The most recent financial crisis has shown us that this cannot be the most sustainable option. During the crisis, banks called in their loans when times got tough and, despite economic recovery, bank debt is still hard to come by, with pundits positing that we will never get back to pre-crisis lending levels.
“Becoming a public company can increase profile and visibility”
Raising public equity is often discounted by growing companies and put in the ‘too-difficult’ box. However, public equity has many benefits that can make it a source of permanent capital for your business.
For example, becoming a quoted company gives you access to capital on a continual basis. Your company is able to go back to long-term equity shareholders for subsequent fundraising rounds, as well as supplement this with other sources of finance. This can lead to a diverse and sustainable shareholder base.
In addition, it provides an objective and real-time valuation of the business, as well as a market for your company’s shares. As a result, you can attract, reward and incentivise employees with stock options. Employees and other investors are able to buy and sell shares, thus participating in the company’s growth and success.
A listing can also provide numerous business opportunities. It can offer a potential exit for owners. It can also lead to beneficial acquisitions, using your company’s shares as an alternative to cash. Equally, becoming a public company can increase profile and visibility, which can help attract more customers and reinforce your relationship with suppliers. This, in turn, can open up access to new markets and business opportunities. So, your listing becomes a quality kitemark.
“Raising public equity is often discounted by growing companies and put in the ’too-difficult’ box”
However, all this comes with its challenges. Being a public company comes with significant costs – both financial and time. Your company’s share price and value may be affected by factors outside your control as the market reacts to economic conditions or sentiment.
With an increased profile comes greater public scrutiny. External investors will expect results and long-term growth. But, the more your company actively engages with investors and manages expectations, the more opportunities for growth and support will come.
Public equity provides SMEs with permanent capital that helps to generate long-term, sustainable growth and more growing businesses should consider how it could help them. It is not an option to be taken lightly, but, for the right company at the right stage of development, it can accelerate growth and can create sustainable long-term value for shareholders.