June 8, 2020

SME’s greatest challenge is access to capital

This pandemic-causing downturn has been incredibly abrupt - shutting borders and businesses, stretching health infrastructure and disrupting supply chains, in addition to creating fear. 

Through all of this emerges new behaviours, new orders where the best of our businesses adapt, innovate and revive. This is the moment for the many small and medium businesses with their built- in nimbleness, natural empathy to social good, to grow and embrace their confidence, take bigger thinking and look for the capital to do this at the speed these windows require.

Which leads us to believe that our private industries with this adaptive spirit, can offer so much in our recovery. If we can fire up smart, well-positioned, experienced and innovative companies that are primed for growth we too will grow. If we can raise their status and earnings, then we have good reason to believe that they can contribute hugely to GDP, and support, or even surpass, the slower government stimulus.  The world has been watching us and our global brand has elevated. A path could well be paved for the next *‘Xero’ to demonstrate and capitalise on NZ’s innovative personality.

Here we have an opportunity to pull together, back one another and rise strong. 

But here’s their issue - access to capital is challenging in such times, particularly for SME’s looking for $2-10m.  So the potential growth from new market entries, great ideas and new models is constrained. Bank funding is restricted in these environments and in many cases is not the optimal long-term funding alternative anyway. 

Investment into private businesses or SME’s can be incredibly rewarding – growing wealth and offering a great sense of pride.  As an owner of an SME, access to external capital can offer new expertise, new markets and new ideas as well as an ability to scale. So how does the SME and investment community make the connection? 

Syndex is on a mission to fire up the SME’s. We offer a digital platform to support proportional ownership in private businesses making it easier to transact, manage, explore and communicate with investors and issuers.

MyFarm’s hop gardens in Nelson is a perfect example of Syndex bridging the gap between business and investors. The hop industry is in an exciting growth stage with fierce demand from many countries. MyFarm, one of a few corporate entities in the industry of family-owned businesses have recently fund-raised for a second plantation. This growth strategy will create more of the popular product as well as spread the cost of the harvesting and processing equipment already invested. Capital, drawn from a group of investors, has gone towards the garden infrastructure, whilst pre-season orders have reached capacity before any plants see the ground; a source of comfort for investors.  

We’re proud to support the innovation and ingenuity of our nation via our private market investment platform.  Bringing people together to enable the growth of a business is part of our community promise. We are solving the issue of access to capital by bringing investors and businesses together and providing efficiencies in both digital tools and governance to create stronger investments.

Syndex challenges us all to consider our investment strategy and support paving the way for NZ growth. Growth and support could culminate in an investment reward, quite possibly like some great NZ businesses we have seen sold; PowerbyProxi, BBC Technologies, Navman, Sistema, that still continue to employ New Zealanders and contribute to our economic growth through recycling capital.

We have to support our SME’s and their dedicated, innovative owners that contribute so much to their communities. Giving New Zealand the opportunity to stand tall and grow big on the world stage and offering New Zealanders opportunities to grow and thrive as investors and employees. 

To learn more about the services provided by Syndex visit our homepage.

*Xero offers a cloud-based accounting software platform for small and medium-sized businesses. It was once a homegrown SME funded by private investors before publicly trading.

Financial investment involves risk of loss - please seek professional advice before making any investment decisions.  The views and opinions expressed in this blog are those of the authors. The information we present is of a general nature and should be used as a place to start your own research. It is not intended as investment or financial advice.

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Ross Verry

Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.

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