Nice idea, or nice little earner?

by Caroline_Norbury on 31-May-11 18:08

Our conference last week saw more than 80 key players from the creative industries, public and private finance sectors gather together to discuss how best to invest in this unique sector.

Last week’s conference “Nice Idea or Nice Little Earner” sought to get to the heart of how best to invest in the UK’s creative industries.  The event was the result of several conversations with a number of people who either managed investment funds or bank lending.  All had expressed interest in supporting creative companies, but had found it difficult to engage with a sector that is seen as small, fragmented, risky and often slightly anarchic. In brief, they said creatives “didn’t speak their language”.  Similarly over the course of several round table meetings it was clear from talking to creatives running small businesses that they continued to have problems finding the right investment or the right lending at the right price.  Interestingly on Thursday, the first day of our conference, the government published a joint report by BIS and DCMS on creative industry businesses access to finance.  The research demonstrated substantial variations in access to finance across the different sub sectors of the creative industries illustrating that some – in particular the creative content sector – were more likely to have their finance applications rejected by finance providers compared to other businesses with similar risk profiles.

(from L to R) Stephen Rockman, Ellen O'Hara, Andrew Mullinger, Caroline Norbury, Will Hutton, John Newbigin, Neil Hewitt, David Prais, David Scholtz

The concept of a “common language “is probably one of the most significant learnings of the day.  Creative businesses often complain that lenders and investors don’t “understand” their business models, but equally it’s clear from listening to the many financiers present that creatives are equally culpable and need to understand the perspective of the lender/investor.  This seems to be borne out by the research conducted by BIS/DCMS as well as the on-going conversation of the conference.

The other common topic was the requirement for “money and more” – i.e. investment on its own is not enough; what is needed, agreed by both investors and potential investees, is a series of bridges and support between investment stages.

Other recurring comments included the following:

• CI’s are thriving and talent and entrepreneurship is abundant. There is a real opportunity to improve connectivity between creative businesses and investors;
• Difficulty in obtaining early stage investment is a widespread problem;
• However, the problem is rarely due to lack of access to finance alone. Often, relationship building is just as important, if not more so;
• There is a real need for a good network of private sector mentors to guide and inform companies when they receive public sector investment;
• There needs to be better connectivity of public and private expertise, and development of better networks outside of London;
• It is important to challenge and disprove the innacurate perception that the CI’s are less focused than other sectors and less serious about commercialism;
• Creative companies must move away from a dependency culture of reliance on grants, and instead move towards making better use of limited funds available;
• The UK has a cultural problem of not thinking ‘big’ enough compared to US counterparts;
• It is difficult to define ‘creative industries’ - and it’s clear that one size cannot fit all;
• The challenge is to find a way of ‘pump-priming’ the CI ecosystem whilst ensuring businesses  remain independent, forward thinking and not reliant on public investment in a time when public funds are scarce;
• The sector would benefit from a comprehensive creative industries directory, to signpost new businesses to the full range of private and public investment opportunities;
• Dialogue could be improved between private investors who can refer businesses that aren’t suited to investment on to ‘investment ready’ advice;
• Education in business development should be improved from an earlier stage, in school and University curriculums. Entrepreneurship needs to go hand in hand with practical skills development.

Luke Johnson, Risk Capital Partners

These valuable discussions were well summarised by Luke Johnson in his closing speech - that “creative industries are doing a vital job, and without mentoring and advice, many of these businesses would fail,” and that it is hugely important that companies build and maintain good relationships with their investors.

Will Hutton, The Work Foundation

And as our opening speaker Will Hutton commented, “it is vital that government and private investment work together to build networks and understanding between investors, creative and cultural entrepreneurs, and those able to seriously boost the UK’s cultural and creative economy. If we do not sort the issues of investment and business development in the creative industries, we risk seriously eroding the UK’s competitive advantage in this area.”

Following the conference a smaller group of financiers, policy makers, business leaders and support agencies met to agree how to refine our learning and transfer it into practical action.  Helpfully there was an on-going enthusiasm and commitment from an already busy and probably over-committed group of people who have agreed to work together to develop some practical solutions to the themes raised.  We will be reconvening these groups over the course of the summer to put together our own road map which we will in turn present to the newly announced Creative Industries Council and Creative England – the new body that Screen Agencies including South West Screen will roll into.  If you’d like to contribute to this conversation then please email us or respond via the blog.  We will continue to update the creative community through our blog and e-bulletin.

Tagged:Caroline Norbury, Nice Idea or Nice Little Earner

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