Back in 2012, the coalition government combined several SME incentive and support schemes into one body (now known as the British Business Bank), to help streamline and optimise how these entities obtain support from the state, with the ultimate aim of helping the British economy rebound from the crash. This started with a loan scheme aimed at startups, to be provided by a new government-owned enterprise: the Start Up Loans Company. Last week, this programme passed a major milestone, having issued £500m to over 63,000 British SMEs and startups since it first started seven years ago.
With the average loan size at £7,823, and the maximum limit set at £25,000, this programme represents some of the first funding prospective entrepreneurs will have access to. Social values and diversity seem to be a priority for the programme, with 39% of funding going to female entrepreneurs, 22% to entrepreneurs with a BAME background, and 36% to people who were previously unemployed.
And, whilst London-based entrepreneurs have received more than any one region, the North as a whole (including the North West, North East and Yorkshire) has received more than the capital. The regional bias of this fund seems relatively balanced when compared with the overall business funding picture in the UK.
The British Business Bank’s own analysis indicates that every £1 invested via these loans has delivered a return of £3.30 to the British economy. Most of these loans go to businesses that have no need or desire to scale. However, some of these loans have helped businesses set up that have gone on to become well-known names in the UK’s fast-growth startup ecosystem. We’ve highlighted some of the leading lights from the programme below.
Qudini develops software that provides a suite of services to retail merchants, including appointment booking, a queuing system, in-store click and collect, and order management communications. All of these systems help retailers better manage customer footfall, allowing for a more efficient and customer friendly experience.
Since first receiving their initial funding from The Startup Loans Company, the company has undergone several equity funding rounds (the last of which may have valued them at over £10m), attended a retail accelerator set up by John Lewis and LMarks (JLAB), another accelerator by Wayra, and featured on the Startups 100 fast-growth business list.
Cornerstone is the British response to the American men’s grooming subscription services Harry’s and Dollar Shaving Club, both of which were recently acquired for over $1 billion each. Founded by Oliver Bridge, who founded a plus-sized footwear company at age 15 before going on to study PPE at Oxford, Cornerstone offers men’s toiletry supplies via subscription, with their basic product plan consisting of a nicely designed razor, 6 blades, and shaving cream, delivered every three months, at £20 a box.
Company filings issued by the company indicate they’ve raised over £8m across 6 equity finance rounds, including one round on CrowdCube, and with venture backers including Global Founders Capital and Calculus Capital. Similar filings indicate their latest round valued them at £12.5m.
Operating in the crowded food delivery sector, City Pantry has carved out a niche by focussing specifically on commercial office deliveries, as opposed to home deliveries. Office managers can choose from a range of over 400 restaurants and caterers through the online City Pantry portal, and their marketing claims they carer to over 30,000 people at 700 companies every week, with clients including, Amazon, Spotify and Google.
This interesting startup operates somewhere between the realms of MarkTech and Adetech. Smartzer‘s developers have coded an interactive overlay that sits over video content, allowing users to click on an item of clothing featured in the video that they like, taking them through to the item on the merchant’s website.
Founded by Karoline Gross, a Finland native who graduated from UCL’s MSc in Technology Entrepreneurship in 2014, Smartzer has raised nearly £1m since incorporating in 2013, and their latest indicates they may have been valued at £5m.
pip & nut
A well-known brand to anyone who loves peanut butter but is also concerned for the environment, Pip & Nut’s various nut spreads are completely free from palm oil (the cultivation of which is responsible for large-scale felling of rainforest in Southeast Asia). As a young FMCG company, Pip & Nut have already won coveted spots on Tesco’s and Sainsbury’s supermarket shelves, which is no mean feat in itself.
Similarly to Cornerstone, they’ve also raised equity finance on crowdfunding platform Crowdcube, whilst their most recent round has seen them valued at around £15m. The team featured on the Startups 100 List for three years in a row.
If we take the BBB’s analysis at face value, it would seem that the Startup Loans Company is playing a significant role in supporting the SME entrepreneur economy, and has even had a hand in helping severable scalable companies grow, as this list illustrates. What’s more, as a commercial entity in itself the Startup Loans Company itself has seen sales grow considerably from 2014 onwards (from £25m to nearly £70m), and in 2018 they turned a small operating profit. Hopefully this state enteprise will continue to thrive for years to come.