Macey is based in the south west and focuses on Cornwall for the FSE Group using the £40m Cornwall & Isles of Scilly Investment Fund. There are plenty of excellent businesses in the far south west, he says, but they can struggle to engage with predominantly London-based VC funders and may fail to reach their full potential as a result. 

“For an equity investment, it is not just a one-off: it’s a long-term relationship,” he says. “So it is important to have a point of contact in the regional geography for both the investor and investee.”

With the pandemic driving a year of virtual meetings, has the world shrunk and the distance between places like London and Cornwall become less relevant? To a certain extent, Macey replies. It has become easier to set up the initial meeting because booking in a Zoom call is less demanding than going all the way to London and back.

“The ‘Zoomification’ has helped, but nevertheless, it is such a big decision [to get funding] so having an investor that knows the local geography is important,” he says. 

A proximity that proved to be important in the eye of the COVID storm. In Q2 last year, at times there was an end of the world feeling, Macey said, and it was important to assess the existing portfolio. To ensure companies on the books were able to cope with the disruption. 

“That was the first step, but we certainly didn’t turn the tap off. We were still trying to get deals done, mainly with companies we had been in talks with prior to the pandemic,” he says. 

And he did find some opportunities. In particular, he highlights an investment in ArmaUrto, a company producing innovative protective pads and apparel for cyclists. This turned out to be a success story, with fewer cars on the road and people turning to cycling. 

Also timely, FSE invested in Codices, which creates interactive content for the booming live-stream market, and benefited hugely from the remote working environment. Similarly, FSE portfolio company Wildanet was able to complete a £50m secondary raise with a larger funder, buoyed by the strength of the broadband market in Cornwall.

But Macey notes a recent development this year, with a return to more traditional sectors, like industrial construction. “Business completely dried up for that sector last year and it was really a tricky time, but it is great to see that it is picking up again.” FSE recently led a £2m capital raise for offshore renewables contractor Inyanga Marine Projects, with Macey noting green energy is a particularly hot sector.

And of course in parallel to the pandemic, business had to contend with the uncertainty linked to the UK exit of the European Union, and Macey acknowledges that for many it was a period of nervousness. But the crunch is behind now, he believes. For companies that export to the EU, they managed to get around some of the challenges through freight forwarders and they will continue to face some hurdles in the operational processes. But from the pure funding aspect, Macey has seen improvements, not least because business confidence is back thanks to the uncertainty of Brexit no longer being present. 

One big question that remains on the table is what will happen when the government winds down its pandemic support measures which have helped keep many businesses afloat. Macey believes it is hard to picture exactly what will happen once they are removed.

“One thing to say is governments, not only the UK if you look at what is happening in the US, seem to be very cautious about the next step,” he says. “The US Federal Reserve, which sets the example, keeps saying they are not thinking of raising interest rates or tapering their stimulus.” 

Macey studied economics before going into accountancy and remembers there was a time where such loose monetary policy was a source of concern. But looking at today’s world, these policies seem to be “working better than a lot of people thought, and possibly you can kind of keep it that way for longer than people thought.”

The flip side of the coin is that these policies have resurrected a fear of inflation. 

“It's a tricky thing to manage for businesses,” Macey says. “So far the signs of inflation are there - house prices, commodities, and so on are going up - but it doesn't appear to have formed the wage-price spiral, which can get out of control. People are hoping it's transitory, and therefore this kind of monetary policy is helping and not going to cause a downside in due course.”

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