Top 5 insolvency & restructuring predictions: Venture capital for turnarounds

The UK, along with many other countries, sees fast growing tech businesses as a cure for many economic problems. A key ingredient for the success of these businesses is money. However, the main funders to this sector have, over the last year, felt somewhat constrained. High interest rates and uncertain stock markets have raised big question marks against the viability of a lot of early-stage tech business funding propositions.

However, we think 2024 will be better. Here are a few reasons:

Interest rate fall: With rates in the US already falling and inflation seeming to trend down, it seems to us, likely that UK interest rates will come down over coming months. We say that despite a backward step in the January inflation figures and the MPC holding bank rates in their 1 February meeting as we think the downward pressure will become irresistible over coming months. That will make other investments seem, comparatively, more attractive.
New government feel good factor: If you believe the polls, a change of government seems likely in the next 12 months. Twinned with incentives for business that a new government (or even a continuation of the current government) are likely to promise around an election, optimism engendered by a new leadership will likely give a boost to all business- but particularly of the opportunistic early-stage type.
Growing pressure to act: Money needs to go somewhere. As noted, falling interest rates, make deposits and bonds less attractive. Our established and articulate early tech hub of businesses, advisers and investment managers will put a strong case for money to move in their direction.
Restructuring law: The UK continues to offer flexible tools for restructuring businesses. That is particularly helpful for early-stage businesses who, having been starved of funding over recent months, carry an overhang of debts. Pre-packs, CVAs and restructuring plans can offer a relatively pain-free way through these issues, which are not offered by many other countries.
Fundamentals remain strong: The UK can also boast world class universities, a strong funding environment, and a commercially driven and flexible legal system. These continue to be a great generator of quality ideas and businesses.

The journey is unlikely to be free of interruptions. World crises, a high-cost base in England, politicisation and restrictions on immigration all pose potential obstacles. However, we continue to be optimistic that 2024 will be a good one for venture capital and that the restructuring industry will be a major partner in this development.