Insights
By Ashley Reeve | 30th July 2024
Hello, and welcome to this month’s Finance Market Update.
What a month it’s been! Heartbreak again for England fans, but let’s not talk about that… I just can’t.
Following the post-COVID boom, the last few years have been tough and unpredictable for many industries. The uncertainty has led to the majority of businesses to “batten down the hatches” and ride out the storm. This cautious mindset has stifled growth… but, the good news is there are a few early signs this could be changing!
We have a new government, the pound seems to be holding well after the election, inflation is down and there are talks of interest rate drops on the horizon. All positive signs for some welcomed stability for businesses.
Some CFOs I speak with are frustrated in their current role, many of whom had been hired in 2020 / 2021 to lead expansion projects internationally, M&A, and IPOs, but with the last 18 months having been focused on restructuring, redundancies, cost-cutting, and cash flow management, the opportunities have often fallen short of what was sold. We’re seeing many CFOs move from passive candidates – keeping one eye out for a more attractive opportunity, to active candidates – proactively searching for a role, networking, and keeping tabs on the recruitment market in general.
The early signs I mentioned above could be a welcome boost to CFOs hoping to land a more interesting role, and we’ve certainly heard of more M&A activity over the last quarter. It’s by far a booming market, and there will be even more candidate competition now, which presents an excellent opportunity for companies in growth mode to tap up some of London’s top talent with less competition.
With a new Government in place, we examine two areas highlighted for growth in the Labour Manifesto and reflect upon what this means for finance teams. Start-Up Genome has also released its 2024 report ranking London as a global hotspot for investment, so we look at how that’ll impact the need for experienced CFOs and FDs across the Capital.
With Labour having taken office, we’re beginning to see the start of the economic future take shape.
Right now, all signs point to residential developments and clean energy being given a boost.
UK housebuilders were optimistic when increasing housing was announced as a key part of Labour’s Manifesto – pledging 1.5m new homes in the next five years. The wheels are already in motion to simplify planning applications and utilise the “grey belt” meaning a more efficient planning process and more land to build on. We expect to see housebuilders and construction firms expand over the next 18-24 months to keep up with demand. We anticipate accounting professionals with experience in the construction and real estate being in high demand and benefitting from higher than average salary increases over the coming years.
Whilst some energy companies may be concerned with potential windfall taxes, Labour has committed to creating Great British Energy and a National Wealth Fund to invest in clean energy, creating more than 650,000 jobs. As a sector that has been growing rapidly, further investment is definitely welcomed.
We expect more investment firms in the UK and overseas to deploy more capital in this area and, as such, will need to bolster their finance teams accordingly. Fund accountants with experience in the renewables/ clean energy sector will be crucial hires. We also anticipate more energy start-ups to experience rapid growth over the next two years, which in turn could attract more VC investment in these early-stage start-ups within the sector.
More investment opportunities bring with them the requirement for more experienced finance leaders to help steer companies looking to raise capital or grow post-investment. If you’re a CFO with a background in early-stage business or post-investment growth, you could find yourself with a number of attractive propositions.
Over the last 10 years London’s tech ecosystem has skyrocketed from $70bn in 2014 to $620bn in 2023. Clinching Europe’s number one spot for tech, it’s now home to 103 unicorns and has seen an 800% rise in VC investment over the last decade.
The Financial Conduct Authority is hoping to revitalise the London IPO market and attract more public listings by simplifying regulations, and the $1bn Advanced Research and Invention Agency should spur scientific innovation and address technological challenges through projects in climate modification, brain-computer interfaces, AI for environmental preservation and lunar exploration.
Top growth sectors include Cleantech, with Octopus Energy announcing its first annual profit of $354m, Fintech —London has more than 1,600 fintech companies, some of which have already gained huge investments in 2023, including Sumup at $308m. And AI, Big Data, and Analytics. AI has been a hot topic of late, and London is at the forefront of innovation in the sector; a London-based company, Builder.ai, recently raised $250m in a Series D.
So why does this matter? More investment in the UK start-up scene means businesses will need to hire more heads in finance. We envisage there’ll be a surge for two key hires in start-ups:
Over the last 18 months, we’ve seen an increase in fractional CFO opportunities from our start-up clients and a shift in CFOs moving into fractional work.
For start-ups that have had their funding switched off and have been focussed on cutting costs and aiming to be profitable quicker, it’s been important for them to have a CFO within the business still. Fractional CFOs have played a crucial part in partnering with CEOs and Founders on strategy to drive growth while managing cashflow and costs.
Interestingly, the market over the last 18 months has pushed a lot of CFOs into fractional work. The volatility of the market, with funding and start-ups failing and the lack of full-time CFO roles, has meant there’s been a rise in CFOs who are open to fractional work. Many have preferred to hedge their bets and work across 2-3 different start-ups during these challenging times. Many are enjoying an improved work-life balance with more home working (often, these earlier-stage companies are operating remotely or less frequently in the office).
If you’re considering a fractional role or would like to understand how an experienced hire could help your business in a fractional capacity, get in touch.
Thank you for taking the time to read our senior finance market update. As always, if you would like any advice on hiring, candidates, salary benchmarking, or a general chat about the market or to discuss your next role, you can now book a 30-minute call with me here.
