Seeking funding in the early-stage investment sector
The Advanced Propulsion Centre’s Head of SME Programmes, Josh Denne, addresses the current opportunities and challenges for businesses seeking funding in the early-stage investment sector.
Securing investment for companies in the early stages of developing initial automotive products can often be a challenge. For many SMEs, part of this task is being able to clearly show how their innovation will become a commercially viable product, especially if it is at initial concept or prototype level. However, in our experience the challenge of getting investment can often go much deeper than pure demonstration.
The Advanced Propulsion Centre’s (APC) Technology Developer Accelerator Programme (TDAP) offers a unique opportunity for SMEs – for whom investment is part of their journey – to support and develop some of the key aspects of an investor’s wish list, and most importantly speak their language. Yes, all investors want to see a working proof of concept and TDAP offers funding to help make this possible, yet this is far more powerful when coupled to a demonstrably viable business model and a clear, coherent route to market plan. TDAP has been formulated and tuned to help companies develop just these things, using delivery partners that intimately understand the wants and needs of the investment community. APC has also collaborated with UKBAA to deliver seminars and 1:1 support to each business in their preparation to talk to investors.
Of course, COVID-19 has thrown a curveball. Emerging data suggests that investments in early-stage business were severely hit by the pandemic, with some indicating that 2020 deals were running at around 50% compared with 2019. Whilst things are picking up again, restrictions in people not being able to meet could slow the process down. Our experience is that many investors prefer to work via recommendations and in areas in which they are comfortable and knowledgeable – this can be a particular challenge in the transport arena. Consequently, a big unknown is how the pandemic will affect the market for transport technologies, something that will only become clear with time.
However, driven by global environmental and political requirements, the “Autotech revolution” that is driving disruption into the automotive industry continues. So, what does the future hold? As expected, we have seen a marked swing towards electrification technologies over the last 10 years and this is now set to become a huge growth area in the decade to come. Interestingly though, we are all now becoming aware that there are no silver bullets for all transport sectors. As an example of this, national and transnational governments are placing big bets on Hydrogen as an energy carrier, and we are seeing growing private investment in this group of technologies. Whilst it is possible that some passenger cars may move towards Hydrogen, it is becoming clear that there is a role to play in buses, HGVs, marine or even aviation solutions. This is potentially great news for the UK as we have some of the key building blocks to make a success of the Hydrogen technology supply chain, so I believe the UK will certainly play a significant future role.
At the APC, we see a real need for more private investment in Autotech, and one of our objectives is to excite and entice more investors into the automotive industry. The clean transport revolution is booming and there are huge opportunities for the right technologies. Our role is to connect the right business teams, with fantastic products, to insight and funding so that, as an industry, we can help create some formidable businesses of the future. We see huge potential in the automotive and transport technology sector, there is a significant role for committed and passionate investors to enable these new concepts to flourish.