Top Challenges Faced by UK Startups

February 25, 2023

Top Challenges Faced by UK Startups

Payrow has been recently cited in the article "Top Challenges Faced by UK Startups" on Hackernoon. The piece highlights the most common difficulties encountered by British startups. One of the challenging situations is banks' reluctance to work with companies that have complex ownership structures, which is often the case for startups.

We are honoured to be featured on Hackernoon and excited to continue supporting the UK startup community with our innovative fintech solutions.

You can read an extract from the article below:

Startups face problems for many reasons. The problem may lie in the company culture, product-market fit, or in unique problems specific to a particular industry or region. Here is a list of the most common reasons for startup failures.

— Funding

One of the biggest challenges for startups in the UK is securing adequate funding. Many startups struggle to find investors who are willing to invest in their businesses, and those that do often face high interest rates and strict repayment terms. Additionally, the competition for funding is fierce, and many startups are unable to compete with larger, more established businesses.

Startup founders in Britain are cautioning that the availability of funds is decreasing as prospective investors are becoming more cautious about taking risks due to the growing crisis of high living costs.

"Venture capital investment is slower than ever. The focus of investment has also shifted. Fast returns on investment have become a priority for investors rather than a long-term strategy. But brilliant ideas don't just appear; they require testing and lots and lots of mistakes," — Solomia Boretska, founder of company Lendo Labs told theguardian.com.

Boretska noted that scaling up a new company in the UK is an especially challenging task. She stated that while funding may be available to develop a new technology or carry out a pilot project, obtaining funding for commercialisation or for expanding growth through marketing is currently quite limited in the UK.

— Regulations and red tape

The UK is known for its strict regulations and bureaucratic processes, and startups are no exception. Complying with various regulations, such as employment law and tax regulations, can be time-consuming and costly. This can put a strain on startup resources, making it difficult to focus on growing the business.

Regulations and red tap have effectively resulted in many traditional banks being unwilling to provide services to startups. Traditional banks have a set way of going about things, and it can be exceedingly difficult for them to adapt to unique cases posed by complex kinds of businesses such as startups. Startups frequently have complex ownership structures that can change as the business develops and new investors and beneficiaries become involved.

According to a British fintech Payrow, despite there being a significant number of companies with complex ownership structures, there is a lack of services on the market that can provide adequate financial assistance for this sector. Typically, financial services do not have the technical capability to add several owners, which precludes these kinds of businesses from receiving the necessary assistance from the get-go.

Read the full article on hackernoon.com!

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