smallbusiness.co.uk: Helping your business think big

The government has been urged to do more to help small business entrepreneurs after new figures revealed start-up funding has been drying up for many of those looking to break out on their own.

Figures released by monitoring company Venture Index shows that investment in UK entrepreneurships has fallen significantly since the end of 2006, with median investment down by a third in the last three months compared to the final quarter of last year.

While many venture capitalists and investors appear happy to get involved with larger deals, the market for funding at the lower end of the chain has been laboriously slow, with the figures also showing that just £283,000 has been invested in start up and seed capital in the last three months.

'The availability of risk capital is critical to early stage companies' growth, but what we can observe is a softening of investor appetite for seed and start-up investment,' comments Modwenna Rees-Mogg, managing director of Venture Index.

'We would urge the UK government to address this issue head on. If the equity markets are moving away, not only from seed and start-up deals, but also from sub £100,000 fundings, the government must call on the banking community to reinforce its efforts to enable such businesses to gain their first meaningful source of start-up capital through debt finance.'

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