Half of UK entrepreneurs rely on the bank of mum & dad

A lack of financing and a general skills shortage are among the biggest risk undermining UK’s start-up scene, according to a new survey by the IoD 99 network – a group of more than 650 entrepreneurs under the age of 35.

More than half, some 56 per cent, relied on personal unsecured finance such as credit cards, a further 45 per cent used the money they got from their friends, according to research by the Institute of Directors (IoD).

Nearly 40 per cent of the surveyed said the difficulty accessing financing prevented their company from growing, while 42 per cent said they have trouble hiring people with the right skills, according to the IoD.

Jimmy McLoughlin, Deputy Head of Policy at the IoD, said that the start-up revolution has taken hold in Britain like nowhere else in Europe.

“Finding people with the right skills, and tapping into the right mix of finance will be the biggest factors in achieving scale-up success. For start-ups, overcoming these obstacles can be the difference between success and failure,” he said.

McLoughlin called for the government to make it easier for savers to invest in young companies and warned politicians against UK restrictive immigration system, which might make it harder for growing firm to bring in skilled employees from abroad.

“It is a worry that so many start-ups struggle to hire skilled employees. Therefore, it is crucial that Britain’s immigration system is as open and easy to navigate as possible,” he said.

Developments in alternative finance like crowdfunding and peer-to-peer lending giving entrepreneurs better options, McLoughlin added. “We should strip back the layers of complexity which currently stand in the way,” he said.