Tech hype around Facebook and Twitter making it harder for mid-sized firms to raise funds

Facebook CEO Mark Zuckerberg
Facebook CEO Mark Zuckerberg
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THE valuation hype and share price volatility of global tech giants such as Facebook and Twitter is making it harder for medium-sized technology and media firms to secure funding, new research claims today.

Accountancy firm BDO said access to finance is still the biggest barrier to growth for many businesses.

Its new report warns that medium-sized tech and media companies have become “the squeezed middle” of the sector, by missing out on the rags-to-riches appeal of start-ups and failing to have the multi-billion pound pull of tech giants.

Many bosses complained that fears of a tech bubble have unfairly made some investors wary of the sector.

They also blame a general lack of understanding from lenders and an inability to explain how a new product might generate revenue.

But venture capitalists, private equity investors and alternative funders say they are “crying out” for opportunities and urge medium-sized tech firms to come forward, according to BDO.

Mark Langford, partner at BDO in Yorkshire, said: “Yorkshire is a real hub for media and tech companies and it is concerning that there is a perceived disconnect between the tech and finance community.

“It is important that business leaders know where to turn for funding.

“Bank debt and private equity are the most common forms of funding for growth, but crowd funding, peer-to-peer lending and government grants are also good alternatives.”

It is estimated that medium-sized technology and media businesses in Yorkshire generate revenues of £4bn and employ more than 24,000 people.

Mr Langford adds: “This sector is big business for our region, but its growth potential is even bigger.”