Creative sector investment: February industry updates

2023 continues to be a surprising year, with some really interesting movements in the investment space that creative companies need to know about. Read on for my key takeaways, including:

Matt Browning, Creative UK Head of Investment

What are three things happening in the investment space that are relevant to creative businesses?

1. The growth of crowdfunding

A recent report published about the crowdfunding space has demonstrated the extent of opportunity for this particular form of alternative investment. Crowdfunding in the US is predicted to grow from £1.25 billion to around £3.6 billion in 2030. This development could be key for creative sector companies at a time when traditional forms of investment can be a little harder to come by. Crowdfunding is an approach to financing that has traditionally done well in the creative sector, so it’s definitely one to keep an eye on.

2. Changes to R&D tax reliefs for SMEs

From April, SMEs will be impacted by some major changes to tax and tax reliefs with the enhanced deduction rate giving special cause for concern. From 1st April, this will decrease from 130% to 86% – a massive drop in the generosity of the scheme. A great benefit (and indeed the intention) of the R&D tax credits has been to encourage SMEs and founders to be innovative and to support them in the creation of the new ideas that have seen us punching above our weight here in the UK. To see that cease is a worry – not just for SMEs – but for the larger players and wider industry as well. From what I’ve experienced, those developments that hurt SMEs tend also to hurt the wider creative economy.

3. The end of Tech Nation

Startup organisation and accelerator, Tech Nation recently announced that it was coming to a close after 12 years in operation. The agency, which has supported the tech industry for over a decade, lost its Government tender to Barclays Bank back in September. This news has had founders and quangos alike feeling uncertain about their futures. The former are now unsure of the continuance of the support they have received from Tech Nation, while the latter have had the vulnerability of their situation (ie: reliance on Government funding) made painfully clear.

With Barclays taking over, we don’t know if some of the value-add services of Tech Nation will be continued – for example, the Rising Stars competitions and visa support. How things now progress with Barclays is unclear, but it is certainly likely to evoke some industry naval gazing.

What’s a big challenge for creative companies seeking investment right now?

Startup organisation and accelerator, Tech Nation recently announced that it was coming to a close after 12 years in operation. The agency, which has supported the tech industry for over a decade, lost its Government tender to Barclays Bank back in September. This news has had founders and quangos alike feeling uncertain about their futures. The former are now unsure of the continuance of the support they have received from Tech Nation, while the latter have had the vulnerability of their situation (ie: reliance on Government funding) made painfully clear.

With Barclays taking over, we don’t know if some of the value-add services of Tech Nation will be continued – for example, the Rising Stars competitions and visa support. How things now progress with Barclays is unclear, but it is certainly likely to evoke some industry naval gazing.

What are the big movers and shakers we need to know about?

A big development has been Sony’s investment of £10 million into Nexus, a live-service game and creator platform. This development will support Nexus in its building of in-game software for games developers. More generally, this an interesting investment because it sees Sony contributing significant funds alongside VC firms. Though the amount is modest compared to ticket sizes we’ve seen over the last 18 months, it’s nice to see a sizeable deal like this in the early part of the year.

Other exciting developments come from the education space. The first of these is the BFI’s announcement of a £14 million National Lottery fund to support children’s educational content. The second is a smaller regional win for the southwest in the form of a £500k investment for boomsatsuma. This Bristol-based company connects students to the Creative Industries through its offering of creative and digital education programmes available to students from Key Stage 5 though to undergraduate level. It’s great to see investment into creative education, and with the skills shortages faced by the Creative Industries, we can only hope it spurs on future generations.

This months’ sector focus is… AR

This one’s been around for a while, but I think we are seeing some really interesting new developments, as both Virtual Reality (VR) and Augmented Reality (AR) stocks grow in popularity.

Think of AR and most people will probably remember the underwhelming release of Google Glass back in 2013. Fast forward to 2023 and we’re seeing some new applications of AR showing off how it can be implemented in individuals’ daily lives, as well as in industry. One of these developments is in improved ‘smartglasses.’ No longer do they look like a poorly realised sci fi accessory – the newest bunch of smartglasses are both highly functional and fashionable.

We’re also seeing some innovative applications to pharmaceuticals and education. Google Glass has now been used to perform operations in over 14,000 studies, while Microsoft’s HoloLens is being used by students working in laboratories and helping them to make significant efficiencies. Another trend is that of VR and AR companies creating enhanced learning experiences through the use of immersive technologies. Though Google might not have got it quite right back in 2013, AR as the future is starting to come into its own.

What are the new programmes and events that businesses need to know about?

Creative Coalition Festival, virtual 1-3 March
Changing the Faces of Angel Investment, Bristol 23 February
Games Growth Summit, London 23 February
Catalysts and Connectors: Tools for the Creative Industries: accelerator call-out for south west businesses, deadline 13 March
Channel 4 x National Film and Television School: new regional training courses

If you’d like to learn more about the investment offerings available through Creative UK, visit our Investment web pages here.