A landmark report highlighting serious barriers to funding for the creative industries has been launched ahead of The Big Creative UK Summit: Investment for Growth (taking place Tuesday 4 March) – along with a call to explore a new investment framework to address the obstacles.
‘Unleashing Creativity: Fixing the Finance Gap in the Creative Industries’ – conceived and initiated by Creative UK and undertaken in partnership with the Creative Industries Policy & Evidence Centre (Creative PEC) – is based on a survey of 896 firms from all creative sub-sectors, located right across the UK’s nations and regions.
The report was written by Professor Hasan Bakhshi, Director of the Creative Industries Policy and Evidence Centre (Creative PEC) with Dr Josh Siepel, Lara Carmona and Amy Tarr.
Benchmarked against the SME Finance Monitor survey, the report finds that creative organisations have a higher appetite for growth than businesses in other sectors (72% vs 59%) – but were over four times more likely to face obstacles in accessing the finance needed to fund it.
Despite the creative industries being named as one of eight priority growth sectors for the forthcoming UK Government Industrial Strategy, the report reveals some worrying trends. Over half (51%) of creative organisations reported that they believe funders view them as too risky to invest in, 41% of survey respondents say that there are no suitable financial products on the market to meet their needs, and there was clear evidence that – in many cases – funders and creative industries organisations do not understand each other’s needs.
The report also highlights concerning data around equality, diversity and inclusion. Female and ethnic minority-led creative organisations are more likely to report needing capital (9% and 10% respectively), but face more barriers to access. Organisations with ethnic minority-led leadership are more likely to view access to finance as a barrier, and are 17% more likely to have to put their own capital into the business.
These issues are compounded by market failures around financial information. 30% of those surveyed said they lack the knowledge about finance to make informed decisions for their business and 27% of organisations feeling they do not know where to go for information about finance.
This work is generously funded by YouTube, with support from the Creative Industries Council and Bloomberg Philanthropies.
Creative Economy Capital: A new investment framework
In response to the findings, Creative UK has provided clear policy recommendations to address the issues – including strengthened tailored business support for the sector, new targeted financial products, and extended bespoke advisory services.
Also launching today, Creative UK has published a provocation for a new investment framework: Creative Economy Capital. This is designed to better align commercial capital, social impact finance and philanthropic investment – ensuring that creative enterprises can access the right investment at the right time.
Designed to address the issues highlighted in today’s report, Creative Economy Capital would channel investment into intermediaries, tailored to the distinct needs of creative organisations at various stages of growth, with public capital providing guarantees and first-loss investment to de-risk private contributions.
As a first step, the provocation calls for the establishment of a regulatory sandbox, led by the Prudential Regulation Authority (PRA), as has been advocated by leading UK business bank, Natwest and Inngot, an IP valuation specialist.
This would allow financial institutions to test lending models that incorporate intangible assets as collateral, gathering necessary evidence on risk profiles and return potential before full market implementation.
A regulatory sandbox would provide necessary evidence on default rates and investment returns, helping to derisk future commercial lending, whilst enabling targeted capital requirement adjustments, allowing financial institutions to develop viable lending models without excessive risk exposure.
About the Summit
The report and provocation have launched ahead of The Big Creative UK Summit: Investment for Growth, taking place Tuesday 4 March 2025 at cultural place-making destination, Kings Place, London.
Designed to connect investors, creatives and policymakers – the event is an opportunity to shine a light on the opportunities that exist within the sector. More than 120 investors will meet 60+ business from across the country, who have all received business support from vital programmes, such as the Create Growth Programme (CGP); Creative Enterprise and the North East CCIP [Links].
There is also a rich programme of keynotes, panels and presentations – covering areas such as how growth can be achieved through targeted regional investment, the opportunities and challenges for international investment in the UK, and viable business models for cultural and creative businesses.
Commenting on the report and provocation launch, Caroline Norbury OBE, Chief Executive of Creative UK, said: “This landmark report confirms what those of us who work with creative businesses have long known: the sector is hungry for growth but starved of strategic investment. Already growing over 1.5 times faster than other sectors in real terms, imagine what could be achieved if the barriers to suitable financing were broken down.
“At Creative UK, we work with hundreds of businesses every day, investing directly in creatives and providing hands-on business support to SMEs in our regions. We have seen first-hand how transformative targeted support can be.
“That’s why we’re calling for a new investment framework which empowers more investors to work with our sector. Creative Economy Capital is a ‘one front door’ solution, providing access to finance to tailored financial products, investment intelligence and structured funding mechanisms to meet the needs of creative enterprises. We’re already working with key partners to develop the concept further and look forward to sharing a more detailed proposal in the coming months.”
Hasan Bakhshi, Director of the Creative Industries Policy and Evidence Centre (PEC) said: “Our data confirm that creative industries firms are much more likely than firms in other sectors to identify access to finance as an obstacle to their growth.
“Digging deeper, we find shortcomings in both the supply of finance – with investors and lenders all too often ill-informed on the economics of the sector – and the demand for finance – with too many creative businesses not investment-ready, and even when they are, not being fully aware of their options. Addressing these problems therefore needs system-wide policy changes if the Government is to follow through on its commitment to harness the creative industries’ growth potential.”
