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Friday 25 November 2016 1:00 am

Early-stage businesses could rake in £25bn next year from retail investors, who want more risk and higher returns

By: William Turvill

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Early-stage companies could be raking in a combined £25bn from individual investors in 2017, a new report has estimated.

Retail investors are planning to take more risks next year and may be looking to early-stage companies for higher returns, according to an analysis of the sentiment and expectations of 1,000 retail investors by crowdfunding platform SyndicateRoom.

Read more: Equity crowdfunding: How to do your homework as an investor

The figures: £25bn for early-stage businesses

The study estimates that 58 per cent of the population holds an investment, with 40 per cent of those in a company equity.

With investors willing to reallocate around 14 per cent of their wealth into early-stage businesses, SyndicateRoom estimates that around £25bn could be be available to be transferred between large-cap to smaller businesses this year.

The platform estimates that this could, at historic return rates, see £7bn of wealth created for investors.

Investors feeling more risky

The look-ahead to 2017, published today, found 39 per cent of individual investors are more willing to take risks compared with a year ago, compared with 18 per cent who want to be more cautious.

The study also found that 50 per cent consider themselves to be “off-track” in meeting their financial goals.

Asked about moving their investments to early-stage companies, two-thirds of those surveyed said they saw the “prospect of higher returns” as a big incentive for doing so.

Read more: Investor confidence in UK shares falls amid Brexit "nervousness"

SyndicateRoom research estimates that early-stage companies generate 33 per cent compound annual growth rate (CAGR), compared with five per cent on the London Stock Exchange’s main market.

“In a low-yield environment, compounded by recent macro-uncertainty caused by Brexit and the US election, reliable information on high-growth investment is more important than ever,” said SyndicateRoom chief executive Goncalo de Vasconcelos.

“Our research discovered a fast-emerging part of the UK’s investment market that is hunting for greater growth and willing to accept a higher risk to achieve that investment return.”

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