Oxford’s science & tech sector experiencing fund-raising delays

Sarah Hayward Advanced Oxford 2

Some of Oxford’s most innovative companies are expressing significant concern about future investment and cash-flow as the fall-out across the science and technology sector from Covid-19 continues.

In new research published by Advanced Oxford, the membership organisation for those leading the biggest knowledge-intensive companies across the Oxford region, most respondents to the survey are expecting, or already experiencing, fund-raising delays or extension to the time taken to raise capital.

Despite levels of confidence remaining high, according to Advance Oxford, cash-flow is a big concern, but since the survey was published, the government has announced the launch of the Future Fund in May. This will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

But Advanced Oxford said that while the government still has to publish details of the scheme, it is clear that many smaller and younger companies will not be eligible, if they have not already raised at least £250k of equity investment.

Advanced Oxford says that the interventions being planned by UKRI, and Innovate UK in particular, will be particularly welcome and further easing of R&D incentives would be useful.

Before the crisis, nearly all of the companies responding to the survey were expecting to grow. Now fewer than half expect to see growth in the near year.

One company responded to the survey said: “We are an early-stage company, still supposed to be in high-growth, still pre-profit and VC-dependent. This has drastically slowed/stopped revenue growth and so instead of hiring, expanding, exponential growth, we are instead faced with survival mode – cutting salaries, cancelling hiring plans, attempting to buy enough time to still exist post-pandemic when circumstances might be more favourable.”

Another company responded: “We’re in early-commercial. All sales conferences are cancelled to the pipeline will be empty. Existing customers are shrinking/postponing orders.”

Commercial companies have seen negative impacts on sales, ranging from 20 – 50 per cent. More than a third of companies are experiencing significant supply chain issues and 80 per cent of companies are experiencing delays or are stalling their research and development activity.

Respondents also said that with customer factory shutdowns, there are also delays in starting new productions runs.

The effect on employment within the sector is less clear from the survey. Smaller companies, below 25 full time employees, are either taking no action, or no action yet. Advanced Oxford says there may be a number of reasons for this, including the fact that very small companies may be operating virtually, with small core teams and outsourced or contract research activities, which can be managed without impacting on the core team,

Sarah Haywood, Managing Director at Advanced Oxford, said: “Our first set of analysis is based on responses from companies during the first three weeks of lock-down. As we were completing the analysis, the Government announced the Future Fund as a response to support risk-capital backed companies.  We have concerns that this intervention will not support early-stage investment (pre-series A level investment). Our company-impacts survey is still open, and we will continue to collect and analyse responses throughout the lock-down period.”