KAREN JOY BACUDO

Finance Editor

The British Business Bank has committed GBP £50 million to Soho Square Partnership Capital Fund II, becoming a cornerstone investor in the fund.

The commitment is intended to support established small and medium-sized businesses seeking funding for expansion, acquisitions and succession planning. Several US institutional investors have also joined the fund, adding to its capital base.

London-based Soho Square Capital focuses on lower mid-market businesses, providing structured finance to founder-owned companies in the UK. Its model centres on debt-led funding with smaller or minority equity positions, offering an alternative to conventional bank lending and full private equity buyouts.

Fund II will back businesses in sectors identified in the government’s industrial strategy, with a preference for digital and technology, as well as professional and business services. It will lend to companies with EBITDA of up to GBP £15 million and turnover of up to GBP £200 million.

At least 75% of the vehicle is expected to be invested in the UK, with a particular focus on companies outside London across the nations and regions. The commitment also aligns with the British Business Bank’s wider plan to direct more capital towards eight industrial strategy sectors over five years.

Its role as a cornerstone investor is also intended to attract other institutional money into the market. The bank will also be able to participate in co-investments alongside the fund.

Funding gap

The investment highlights a part of the finance market that policymakers and specialist investors consider underserved. Established smaller businesses often need capital for technology adoption, acquisitions or ownership transitions, but may find standard bank loans too restrictive and private equity too dilutive.

Structured capital aims to address that gap by combining secured lending with a more limited equity element. For founders, that can mean raising larger sums without ceding control of the business.

“This commitment is directly addressing a gap in the debt market. It will unlock flexible capital solutions for established businesses with strong growth potential, an area currently underserved by other lenders. It will create more jobs and drive long-term economic growth across the UK’s nations and regions, while strengthening the modern Industrial Strategy sectors which are critical to the UK’s future competitiveness,” said Adam Kelly, Managing Director and Co-Head of Funds, British Business Bank.

The government linked the transaction to its wider economic agenda for smaller companies and regional growth. Ministers have argued that better access to finance for expanding companies is necessary if more businesses are to remain independent as they grow in the UK.

“Through our Modern Industrial Strategy, this Government is ensuring businesses with the highest growth potential have the capital they need to succeed here in the UK,” Blair McDougall, Minister for Small Business and Economic Transformation, said.

“This commitment backs dynamic SMEs in key sectors, helping them scale, create jobs and drive growth, to raise living standards across the UK.”

Founder focus

Soho Square positions its approach around founder-owned businesses facing transitional moments rather than businesses preparing for a sale. Those moments can include operational expansion, investment in technology, acquisitions or succession events in which owners want to retain meaningful control.

Its funding structure is designed to allow business owners to continue building their companies without ceding ownership to a traditional buyout investor. That approach has become more prominent as founders look for capital options between senior bank debt and private equity.

“The Bank’s backing lets us do more of what we set out to do: give founder-owned businesses the institutional capital they need, on terms that let them stay in control and keep building. That is what our partnership capital is about, and having the Bank behind it means more high-quality UK businesses can take their next step without giving up the reins,” said Walid Fakhry, Co-Managing Partner, Soho Square Capital.

The British Business Bank’s core programmes support GBP £23 billion in finance for almost 64,000 smaller businesses. The Soho Square commitment adds to a broader effort by the state-backed lender to use public capital to attract private investors and broaden the range of funding available to UK companies.

Octopus Energy has scrapped its popular coffee reward.

Until now, customers could claim a free hot drink at Caffè Nero or Greggs, with codes generally released before 6am.

Instead, Octopus has introduced a weekly digital scratchcard that offers the chance to win a coffee, among other prizes.

In an email to customers, the company said: “Every Monday, you’ll get a chance to scratch and win an epic prize.

“Tens of thousands of treats, from free coffees to tasty snacks, dinner delivery discounts, chocolate bars and more will be up for grabs weekly to make Mondays a little more bearable.”

The change has sparked disappointment among some Octopus customers, many of whom took to social media to express their frustration with the decision.

One user commented: “Awful decision for the customers, another way of saving money for the company, nothing ever lasts long that is good for the customer and then they try and spin it that it is.”

Another wrote: “Very disappointed to hear we will no longer get our coffees. It stopped me from looking at other energy suppliers but as my fixed deal is coming to an end next month there is no reason not to change supplier now.”

A third added: “Absolutely rubbish. A pretty much guaranteed weekly coffee for a lot of people – to a scratchcard with a slim chance at rubbish nobody wants, and a much bigger chance of getting nothing at all.”

Octopus Energy defended the decision, saying the new system is designed to be fairer for all.

In a response to the complaints on Twitter, the company said: “We wanted to make things fairer so every Octoplus member gets an equal chance to win throughout the day, without the morning rush.”

Ravical has published research suggesting UK accounting firms could generate more than £463,000 in extra annual revenue from existing clients. The study focuses on small and medium-sized businesses in the UK.

The findings suggest many firms are missing sales opportunities not because clients are unwilling to spend more, but because accountants are not clearly explaining what else they can offer. Almost half of UK SMEs surveyed (47%) said they would pay up to 25% more for additional services from their current accountant.

The research puts average annual spending on accounting services across UK businesses at about £19,700. The largest concentration of clients sits in the £10,001 to £25,000 spending band, which the study identifies as the main area for incremental revenue growth.

That matters as parts of the accounting sector face weaker demand and staffing changes. Recent job cuts at Deloitte, KPMG and PwC have added to concerns about market conditions, even as firms look for ways to offset slower growth in some service lines.

Client demand

Ravical’s data points to a broad demand for a wider relationship with existing advisers. According to the company, 92% of businesses would be willing to pay more if their accounting firm offered the extra support they needed, while 94% would consider expanding the relationship with their current provider.

The issue appears to be communication and responsiveness rather than resistance to buying more. In figures published alongside the study, 38% of businesses said they would take up additional services from their accounting firm if it matched the speed and responsiveness of other providers.

That gap may be opening the door to alternatives. Seven in ten SMEs (70%) said they had acted on financial, tax, or business advice generated by an AI tool during the past year without first checking it with their accounting firm. A related version of the findings put the share at 71%.

The figures suggest businesses are not waiting for formal advice channels when they need answers quickly. Instead, some are using AI tools to fill gaps when they feel their accountant is too slow to respond or is not offering the guidance they want.

AI pressure

The study argues that automation is reshaping the balance of work in accountancy. As more compliance tasks become automated, firms may need to rely less on routine processing and more on advisory work to protect revenue and deepen client relationships.

For smaller businesses, that advisory work can extend beyond annual accounts or tax filings. The survey suggests clients increasingly want help with financial planning, tax questions, commercial decisions and broader business issues.

Joris Van Der Gucht, Co-founder and Chief Executive Officer of Ravical, said the market signals were stronger than some firms might assume.

“There’s a misconception that the market is shrinking. Our findings show 92% of businesses would be willing to pay more if their accounting firm offered the additional support they need,” said Van Der Gucht.

He said the opportunity for growth already exists within many firms’ current books of business.

“Accountants are sitting on a pool of opportunities to unlock commercial expansion, and those that strategically engage with existing clients will prevail,” Van Der Gucht said.

Growth route

The findings are likely to feed into a wider debate about how accounting firms should respond to AI and changing client expectations. For years, many practices have chased growth through client acquisition, but Ravical’s research suggests there may be more immediate gains in selling additional services to existing customers.

That route could also be less costly than winning new accounts in a competitive market. Existing clients already have an established level of trust, know the firm’s processes and may be more likely to buy adjacent services if they see clear value.

Still, the survey indicates that trust alone is not enough. If businesses are already acting on AI-generated financial or tax guidance without consulting their accountant, firms risk losing influence over decisions that once would have been more likely to come through a direct adviser relationship.

Van Der Gucht said AI should be seen as a tool that changes how firms work rather than as a simple substitute for accountants.

“Businesses aren’t necessarily looking to replace their accountant with AI, but they want more value from the one they already trust,” he said.

He added that the combination of existing client demand and workflow changes could alter how firms pursue growth.

“The fact that 94% of businesses would consider expanding their relationship shows the fastest route to growth is already on their books. With the support of AI, accounting firms can now streamline workflows and focus on delivering more tailored services to clients,” Van Der Gucht said.