Despite Covid-19, local growth economy businesses remain ambitious about growth

BGF releases first survey into the attitudes of growth economy companies in England and Wales:

  • 72% of regional growth economy companies say they are still motivated to grow their business in 2021
  • 38% of respondents say that Covid-19 has presented their business with opportunities for growth
  • 64% say that the pandemic has prompted them to make permanent changes to their business

 New research released today by BGF – the UK’s most active investor – has highlighted for the first time how growth economy companies are responding to Covid-19.

According to the survey of 532 companies, carried out by independent research company Delineate, the pandemic has created significant barriers to growth for 58% of businesses based in Wales and the South West of England.

However, despite the obvious headwinds, 72% of respondents remain motivated to grow in 2021. Promisingly, over half (58%) have experienced stable revenue throughout Covid-19 (17% above average), with operational risk highlighted as one of the primary concerns along with lack of market demand for products and services. Despite this, market growth is seen as the greatest opportunity for businesses in Wales and the South West (29%)

It appears that the pandemic has changed how growth economy companies are operating – for good. Six in 10 local companies that the pandemic has triggered permanent changes to their business models. Just under half (48%) have invested in digital infrastructure and one in four (26%) have entered new sectors.

There are more than 21,000 growth economy companies in the UK, according to research undertaken by PwC for BGF. Two per cent of these firms are based in Wales. Growth economy companies have revenues between £2.5m and £100m – the majority are fast-growing and profitable, with total turnover rising 4% a year on average (between 2013-18), compared with average GDP growth of 2% a year over the same period.

It appears that continued investment is seen as critical by the respondents. All respondents indicated they had made some form of internal investment during Covid-19, with the highest numbers of businesses focusing investment on sales and marketing, followed by technology and digital infrastructure.

Overall, the use of external funding to meet their financial needs has been prevalent throughout the pandemic, with 80% of companies indicating they had taken on some form of funding. The highest proportion of funding accessed through the pandemic by respondents in Wales and the South West was the furlough/job retention scheme (40%).

26% accessed the Coronavirus Business Interruption Loan Scheme (CIBLS) and 25% made a personal investment in their business in the last 12 months.

Private equity has been a source of funding for 12% of businesses in the last year. However, one in five indicated they would be looking to raise private equity capital in 2021.

Local growth economy companies are of the view that targeted investment of between £1m to £10m (78%) would have the greatest impact on the growth trajectory of their business.

Despite the uncertainty of the pandemic, 60% reported that their teams have worked as effectively throughout the pandemic, and 62% feel that the company culture has strengthened over this time. However, 38%, expect to revert to previous ways of working when able, signalling some permanent changes to ways of working as a result of the pandemic.

When asked about staffing levels, 20% of respondents said they planned to make a few redundancies in the months ahead and 8% said they planned significant redundancies. However, 18% of respondents said they planned to hire a few new staff and 6% said they planned significant new hires – signalling that overall employment across the growth business population will remain robust.

Ned Dorbin, BGF’s head of South West and Wales, said: “It is clear from the data that growth companies in Wales and the South West remain motivated to forge on for expansion in 2021. It is promising to see that all Welsh respondents have made some level of investment in their business over the past few months, and many have been proactive in pivoting their operations. This is positive news as we move into the new year and companies start to think about their longer-term goals once again.”

Andy Gregory, head of investments, UK & Ireland, BGF, said: “The research suggests that despite the obvious headwinds, growth economy companies have demonstrated high levels of resilience during the pandemic. Importantly, they appear to be thinking ahead to the next 12 months, working to reposition and refuel their companies to pursue growth. As businesses look to either enter new markets or refocus their operations, closing any skills gaps and bolstering their senior leadership teams will be critical.”

The research took place in October and November 2020. It comprised of interviews with 532 respondents (50 across Wales and the South West. Of these companies, 12 were based in Wales) who identified as CEOs, board directors, COOs or CFOs, and owners or partners of growth economy businesses. Respondents are spread across the UK, with a turnover between £2m and £150m and between 20 and 499 employees.

For more information, and to download the Growth Economy Survey Whitepaper, visit:

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