UK Business Growth and Funding - are we getting it right?

Our (relatively) tiny scale up has paid Corporation Tax this week. Without drilling into how painful the principle of Corporation Tax is for businesses making sub ￡1M/year profits, we really could have used that cash for further growth.

In the same week of making this payment, I've been working out how poor my various Pension funds are and also working out what my hourly 'rate' would be for the 3+ years of hard graft, albeit as a side hustle, I've put into rightcoverage. Spoiler alert. Even if we recover the 117K plus interest in full (see link below for video explainer), the hourly rate would be half of the rate I earn as a Consultant.

???? Enjoy the story (click to view)

So weighing up the ?? versus effort, I've had a REALLY long think about whether it's been worth it.

?? Is the time and stress worth it, when my hourly ROI is half of that of working for someone else?

Paying tax means you've made a profit. I guess this is good, right? ??

However, I then made a numbskull move. I checked up on some of the UK Tech giants and looked at Founders and their ROI via salary and bonuses.

I nearly took part in this Crowdfunding round. Although not technically a scale up as the Company has been around for 12 years, they have a strong brand and solid tech. The Founders and Senior Team seem to be very well rewarded and their yearly ROI makes mine look like pocket money.

To raise 6.97M in 2023, you've got to have massively strong brand equity and brand awareness.

I did a bit of background research.

Revenues were low. In 2 full years after 12 years of trading, the combined revenue for those 2 years was less than 10% of the annual salary bill. The salary bill for everyone, not just the Founders and SLT.

And then..........

If losses in 2 years are 74.82M, or 3.11M per month, the Crowdfunding raise is literally equivalent to 2.4 months of trading. 6.97M of investor cash would last less than 3 months. The total losses for this Company now exceed 100M.

I think it's fair to say that in this case, and for this Company, the Founders ROI is diametrically opposite to the performance of the Company.

Back to the point of the article. Are we getting funding 'right' in the UK? If smaller scale ups like ours can scale globally, and are currently making a profit and paying tax, shouldn't we funnel attention, opportunities and cash into them? That approach seems logical, right?

Last thing about this Company, there's been a recent shuffle of Directors, which generally is never great news.

We will never recover from COVID and recent impacts on our economy unless Companies like ours can (once proven) get the attention, opportunities and cash needed to grow. More growth = more tax. It's a simple as that.

The UK needs to go big. Maybe the #labourparty will be elected and things will change.

In summary, we're not getting it right. Smaller, profitable Companies are overlooked whilst continual loss making 'big tech' Companies raise, then raise again and never pay tax as they never make a profit.

That needs to change.