The path to IPO: funding SME jobs and growth

Cutting emissions coverTom Papworth and Adam Corlett

February 2013

High growth small and medium sized enterprises (SMEs) are key to innovation and job creation, but they struggle to access the expansion capital they need in a UK economy over-reliant on bank debt.

This report argues that equity finance has a key role to play in enabling high growth SMEs to achieve scale, as part of a much needed diversification of the funding ecosystem. In particular, it looks at the underused potential of public equity markets - both Initial Public Offerings (IPOs) and further fundraising.

Drawing on international comparisons and new analysis from market experts, the authors recommend a package of measures to expand the high growth SME investor base, boost liquidity and reduce the cost of capital, increase awareness of high growth SMEs, and rebalance a tax system that currently discriminates against equity in favour of debt.

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"The government is committed to ensuring SMEs can access equity finance more easily, especially those businesses with high growth potential helping to create a stronger economy. CentreForum's report contains some interesting ideas for how access to equity finance for SMEs can be improved."

- Rt Hon Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills

"We wholeheartedly support the recommendations in CentreForum's report. Improving access to equity finance for small and growing businesses should be an absolute priority for both policymakers and market participants. Job creation and economic growth rely on the ability of our innovators and entrepreneurs to adequately finance their ambitions, while avoiding over-reliance on debt"

- Xavier Rolet, Chief Executive of London Stock Exchange Group

Click here to read the CBI response to the report

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