Why Is Finding Investment For New Ideas In The UK So Difficult?

Undoubtedly, the Investment Business in the UK is a huge and varied marketplace, with a myriad of investor types occupying well defined sectors and doing pretty well in general. But as an entrepreneur seeking to bring an innovative product into a global market, finding appropriate investment in the UK has so far proved frustrating to almost impossible! Or that at least has been my experience over the last six years of trying. Six years and still trying is not a good metric.

The problem is not that the right kind of investor does not exist; the problem is in being able to make meaningful contact with them.

It’s almost as if those parties who might reasonably be expected to show a modicum of interest in a product in their field of activity, actively avoid the awful prospect of having even a preliminary peek at the prospect. Why?

True, un-invited contact by whatever means (and I have tried them all) is seldom successful. But inexplicably, even contact from a respected source, known to the recipient, has experienced the same negative outcome. Not even an acknowledgement. Silence.

In the main, UK investors seem only to be interested in investing into existing businesses with a plan for growth, usually based on letters of intent or some other such “evidence” of future success. Certainly nothing as risky as a new idea, no matter the prospects. And in particular, those investors who claim that they are interested in supporting “early-stage start-ups” or new technologies will only do so with guarantees that their investment is totally risk free. Difficult to provide.

For the entrepreneur, one would have hoped that serious investors would be making themselves known, lining up and eager to hear what is on offer and keen to professionally evaluate their prospective risks and potential rewards.

But not even looking at an opportunity in order to evaluate its prospects when it is offered is totally incomprehensible. Perhaps they are all so successful that there is no need to venture outside their comfortable world? Perhaps they are just too busy. Venture capitalists? Boldly going where no one has gone before? Sadly only in Star Trek.

On the other hand, could it be the innovators/inventors who don’t understand the nature of investment and its inherent riskiness.? No doubt that is sometimes, maybe often, the case.

But as an ex-architect with a long track record of successful multi-million pound projects, it has been my consistent experience that investors in that sector (i.e. Developers) perfectly understand that a feasibility study, put together by a team of professionals is a preliminary necessity to the secondary investment required for the construction and operation of a major project. The investor is the essential catalyst without whom nothing can happen.

In complete contrast, my current experience in the field of product design however could hardly be more different; where funds in particular, require “Proof of market” for a product that does not yet exist and working prototypes of a Concept that has yet to be developed. Not sure if this is Catch 22 or Alice in Wonderland.

Surely those investors seeking the next world-beater, understand that without their preliminary investment into that early opportunity, it can never actually happen and fulfil its promise of future success. It is the early stage of a project where risk can be carefully analysed, evaluated and de-risked. And who better than the savvy investor to grasp that nettle and maximise their reward by so doing.

Undoubtedly, it is the responsibility of the designer/inventor of a product to prepare a professionally produced Concept Design, Business Plan and Marketing Plan at their own expense for a prospective investor to consider. And it is entirely OK for an investor to decide that a proffered opportunity falls outside their preferred area of activity or is a project too many and decline that offer. Understood.

Unfortunately, for reasons I do not understand, the standard response to a proffered opportunity from a CEO investor is to bin it, possibly on the basis that if it wasn’t invented there it will be unlikely to have any merit and will most certainly disrupt their carefully crafted, current in-house investment plans. But not even the courtesy of a “Thanks, but no-thanks”.

As for Institutional Investors, their view of an investment opportunity is NOT actually looking for the next profitable venture, but rather placing their investments into an antiquated business model designed to manage risk by the utilisation of Tax breaks and Government guarantees. So not really for ground-breaking innovation which is seen as high-risk.

Consequently, much available investment is channelled into a multitude of second-rate, minimum risk projects rather than genuine market disrupters. Hedging one’s bets instead of risk/reward analysis. Not surprised to be told that the majority of them are less than successful.

At this point you will almost certainly be thinking that the case against UK investors is being grossly overstated and is probably the result of the author’s own incompetence. So please consider this and tell me I’m wrong.

The project I have been pursuing for almost a decade sits in the leisure sector and is the re-imagining of the humble golf bag and golf trolley. So not something the world desperately needs (or indeed is at the forefront of most investors’ minds) but nevertheless, if successful, would introduce a transformational product into a huge global market, attracting millions of customers around the world and thereby establishing a highly profitable, sustainable business. A good investment opportunity one would think.