FPE Capital Smaller Company Growth Survey 2019

FPE Capital Smaller Company Growth Survey 2019 shows tech-enabled growth companies strongly positive on their prospects but struggling with recruitment in a buoyant market for UK tech-enabled companies.

The survey looks at how smaller companies respond to the war for technology talent.

FPE Capital LLP (‘FPE’), a growth private equity investor in UK lower mid-market companies publishes its second annual smaller company growth survey, again carried out by MBA students at the Cambridge Judge Business School, looking at business sentiment within high growth businesses on their current opportunities, challenges and issues.

This year’s Survey builds on the 2018 report, which highlighted the recruitment challenge faced by technology enabled software and services businesses in the UK. This year’s report highlights that sampled companies demonstrate strong confidence in their growth prospects – with 79% of respondents “very confident” about the year ahead and their prospects. Although slightly down on 2018, this was accompanied by an increase from last year in confidence around forward recruitment plans – 86% were planning to hire and 71% planning to invest in technology infrastructure.

In a series of recruitment specific discussions, 86% of respondents said they currently find recruitment difficult and 64% expect this to get worse during the coming year. The tactics being used to address this include outsourcing (used by 50%), offshoring (64%) and using contractors (86%). We found significant levels of unhappiness with experiences of these routes, and in each case only half of those using these routes to boost tech ‘capacity’ said they wanted to continue to do so. Perhaps unsurprisingly, the sample companies saw recruitment firms as an expensive method of addressing the problem and 57% of respondents considered them of poor quality. The survey picked up and details a variety of innovative ideas for direct sourcing of candidates, including one company that targets software engineers at the Cambridge Beer Festival.

All of the surveyed companies are privately owned, and when it came to Board visibility of this issue 28% saw it as the number one issue for the Board Agenda, and a total of 71% saw it as a top 5 issue. Many reported their Board being actively involved in recruitment initiatives – reflecting in part the smaller size of these businesses. It is clear that the days are over when this issue was a minor one for Boards of high growth businesses.

David Barbour, Managing Partner of FPE Capital said of the Survey:

“We have been focussed on helping smaller UK growth companies with their scale up and expansion ambitions since 2008. This has given us a privileged view of the changing attitudes and concerns of founders, entrepreneurs and management teams within high growth companies across the last 11 years, from the credit crunch through to the current more positive economic environment, albeit tempered by the imminent prospect of Brexit.

“This survey focusses on giving the companies in this key part of the UK economy a voice to express some of the less reported issues they face and we know from our investing activity – backed up by the results of this survey – that recruitment is the major and growing challenge for UK tech-enabled companies. ”

UK Smaller Growth Company Survey 2019 Cover
UK Smaller Growth Company Survey 2019

The survey looks at how smaller companies respond to the war for technology talent.

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