UK tech firms missing out on billions in government-backed export finance
Digital and tech businesses could be accessing billions of pounds of UK Government-backed financing, though thousands are potentially missing out despite being eligible, according to an analysis by law firm Sullivan & Worcester for International Trade Week.
Based on a review of five years of UK Export Finance (UKEF) data, Sullivan found that companies from the digital and tech sector received just £39.9 million of UKEF’s support. This equates to 0.08% of all support provided to businesses over that time, totalling around £50 billion, and was found to be lagging behind other sectors, such as aerospace and automotive manufacturing, which secured 62% (£31 billion) of the total amount since 2020.
Out of 2,271 transactions over the five-year period, Sullivan could only identify 78 as belonging to tech businesses. The average amount of support provided was also significantly lower. Across all sectors, the average transaction liability carried by UKEF was £22 million. For digital and technology specifically, it was only circa £511,000.
Sullivan reported that most tech businesses tend to raise money domestically before turning their focus to the USA when growth starts to explode. However, companies with global income could use UKEF support to raise substantial funds without giving away equity in their business.
An analysis of Dealroom data found more than 12,000 companies headquartered in the UK that may meet the eligibility criteria for some of UKEF’s products. In an era when AI is kickstarting a new revolution, and the UK is producing more capital-intensive science-based companies, it has never been more timely for scale-ups and investors to know how to benefit from alternative funding routes.
Ben Williams, Partner at Sullivan, said the UKEF could help many UK businesses avoid relocation: “UKEF is well placed to help change this. With significant financial capacity, a proven public-private risk-sharing model, and extensive experience supporting internationally ambitious businesses, UKEF could become a critical source of growth capital for high-growth technology companies, helping the UK retain and scale its next generation of global champions.”
Carl Williamson, Director, SME & Trade Finance and Co-Head of Business Group of UK Export Finance said: “We know tech companies are some of the most international businesses in the country, often selling to customers overseas from day one, and we want more of the UK’s ambitious firms to know what support is available to them. UKEF is here so that businesses of all sizes can meet their international ambitions, getting support to win contracts, fulfil orders and get paid.”
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