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Investment in SMEs: Why they are the innovation leaders of tomorrow
The announcement that SMEs (small and medium-sized enterprises) will receive an additional 10% in government funding in 2024 has sparked interest among investors, recognising the central role SMEs have played in driving innovation and growth.
Investment in SMEs: Why they are the innovation leaders of tomorrow
The announcement that SMEs (small and medium-sized enterprises) will receive an additional 10% in government funding in 2024 has sparked interest among investors, recognising the central role SMEs have played in driving innovation and growth.
In light of this development, Oxford Capital's investment experts are sharing insights on why SMEs should be a focal point for investors in the coming year.
Mark Bower-Easton of Oxford Capital outlined the value proposition that SMEs offer to investors. "Going into 2024, investors are turning their attention to the potential that SMEs offer. They often embody innovation and agility, making them strategic investments in our ever-evolving market. Not only this, but their entrepreneurial spirit and, in particular, adaptability offers a unique edge," he explained. He emphasised that investing in SMEs is not solely about financial gain but about believing in the potential of small businesses to thrive.
The investment strategy for SMEs, as Bower-Easton highlighted, involves diversifying smartly, focusing on innovation, conducting thorough research, and being patient for growth. "The playbook for investing in SMEs is simple: diversify smartly, focus on innovation, do your research and be patient for growth. It’s not just about the financial gain, it’s about believing in the growth and potential of small businesses to thrive," said Bower-Easton.
SMEs leverage their small size to facilitate agile decision-making and innovation, making them a source of pioneering ideas and technological breakthroughs. The adaptability of SMEs allows them to pivot and flourish even in dynamic environments, providing investors with a way to fortify their portfolios against future uncertainties.
Investing in SMEs also represents a commitment to diversifying investment portfolios, which is instrumental in managing risks effectively. These enterprises offer a unique market niche and growth trajectory, potentially safeguarding portfolios from the impact of economic downturns or industry-specific challenges.
Moreover, supporting SMEs extends beyond financial gains, contributing positively to local economies and global economic growth by creating jobs and fostering community development. Particularly for SMEs in the technology sector, investments can provide access to the latest advancements, ranging from artificial intelligence to biotechnology.
For investors considering SMEs, conducting thorough research on their business model, financial health, and leadership is crucial. This involves scrutinising financial statements, understanding industry dynamics, ensuring legal compliance, and establishing strong relationships within the SME ecosystem.
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