The Times - UK (2022-05-26)

44 2GM Thursday May 26 2022 | the times

Business

The growth of Britain’s early-stage

technology start-ups is being ham-

pered by dwindling venture capital in-

vestment, according to a new report by

Google.

The proportion of funding for the

earliest-stage tech companies fell from

15 per cent of the overall investment in

the UK technology sector in 2011 to

4.8 per cent last year, the study found.

Overall, investment in British tech

start-ups has hit record levels, sitting at

£32.6 billion, which places the UK as

the fourth biggest country in the world

for tech investment. However, an ever-

larger proportion of these funds has

gone to later-stage companies, which

present investors with less risk.

During 2020-21, when the country

resorted to technology in unprecedent-

Lack of investment hurts start-ups

ed levels during the pandemic, venture

capital investment in the technology

sector increased by 130 per cent — but

investment in early-stage companies

went up by only 14 per cent.

The report, put together by Google

for Startups, a programme run by the

internet giant, and Tech Nation, a net-

work for entrepreneurs, said: “If seed

and pre-seed tech firms are to grow into

the scaling engines of the UK economy,

the supply of capital that sustains their

early growth must be prioritised, or the

UK runs the risk of stifling future stars

of the global tech stage.”

The early stages of fundraising can

include pre-seed or seed funding. Pre-

seed funding is often known as “friends

and family funding”, where a founder

tries to raise early money for a new idea.

Seed funding is the next stage, where

start-ups attract investment from pri-

vate companies or individuals, often in

exchange for an equity stake.

Apple has, meanwhile, reported a sig-

nificant rise in the earnings of develop-

ers on its App Store as regulators across

the world scrutinise the technology

giant’s control over its digital market-

place. The British industry surrounding

Apple’s retail platform for apps is “lead-

ing the way in Europe” and now sup-

ports some 440,000 jobs, it claimed.

Smaller software developers — those

whose applications were downloaded

fewer than a million times and generat-

ed annual earnings of less than $1 mil-

lion — saw revenue rise 84 per cent on

the App Store in the UK between 2019

and 2021, according to a study commis-

sioned and backed by Apple.

This was faster than the earnings

growth of larger developers, econo-

mists at Analysis Group found.

Apple, which faces mounting scruti-

ny over the cut it takes on developers’

sales, reduced its commission rate from

30 to 15 per cent for the smallest players

on its App Store last year. Those mak-

ing more than $1 million are still typi-

cally charged a 30 per cent commission.

Christopher Moser, Apple’s senior di-

rector of App Store, said: “The UK is

home to some of the world’s most excit-

ing developers and we’re thrilled that

the sector has continued to thrive, lead-

ing the way in Europe and supporting a

record number of jobs.”

David Byers, Callum Jones

Energy storage company needs £150m to plug the gap

Stock markets

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£32.6bn

Investment in British tech start-ups

Source: Google/Tech Nation

An energy storage company set up to

exploit the huge volatility in wholesale

power prices is trying to raise £150 mil-

lion to buy more sites for its shipping

containers full of batteries.

Gresham House Energy Storage an-

nounced a placing to help finance the

purchase of ten new projects, which it

said would boost its power capacity by

747 megawatts eventually to 1,597MW.

It plans to move to a main listing on

the stock market, which on its current

valuation would push it into the FTSE

250 index of middle-sized companies.

If the new capital-raising is success-

ful, the company will have raised

£500 million from investors since 2018.

The company, whose stockmarket

ticker is GRID, buys power from the

national grid when it is plentiful and

cheap, such as in the middle of the

night, and sells it back when demand —

and the price — is higher.

One shipping container can store

enough energy to boil 32,000 kettles

and its sites typically house about 20.

GRID is the biggest of a number of

specialist funds set up to harness the in-

termittent nature of wind and solar

power generation. It says it owns 30 per

cent of UK installed battery capacity.

The wholesale price of power can os-

cillate between zero and £1,000 per

megawatt hour over a single day.

John Leggate, chairman, said: “The

substantial growth of solar and wind

power, backed by the strategic impera-

tive of energy security and the zero-

carbon energy transition, underpins

our core investment strategy.”

The shares are being placed at 145p, a

discount to the 153p at which they were

trading just before the announcement.

The shares fell to 6p yesterday to 148p.

The offer closes today by 3pm.

The company expects to pay a 7p

total dividend this year, a yield of 4.8 per

cent at the placing price.

The industry uses power (mega-

watts), not energy (megawatt hours), to

describe capacity because the speed of

charging and discharging the batteries

is the most important factor in opera-

tional success.

Patrick Hosking Financial Editor