The latest Barclays and Business Growth Fund Entrepreneurs Index has warned of a 23% drop in investment in internet firms from 2013 to 2014.
The report, which measures startup formation, growth and business exits, says that although there’s been a net gain of nearly half a million companies founded since their first analysis in 2012, internet companies saw a significant drop in the number of deals made over the course of last year.
The telecoms sector, meanwhile, saw a 117% increase in stake sales resulting in growth in individual wealth of £0.2m or more, the measure used by the report to understand the value of deals in each industry.
The number of high-growth companies, those with revenue bands between £2.5m and £100m that meet specific turnover and growth targets, has also dropped, demonstrating the difficulty that new companies have in scaling their business.
Stephen Welton, chief exec of the Business Growth Fund, said:
“The national focus on driving start-up activity has borne fruit, but not enough of these firms manage to scale-up to become high-growth companies. Going from start-up to scale-up takes a combination of targeted policy effort, supporting the management of these businesses, and also improving access to growth financing. There is clearly still plenty to do in this regard but the options and environment for company growth are clearly there for business owners to capitalise on.”