A social club in Surrey, southern England might not be the place you would expect to find a cutting edge tech start-up. But Mark Jennings believes that the hundreds of small venues which host live music around the country are ready to take advantage of new technology to improve the experience for customers.

His company, Frenzi, uses block-chain technology to connect fans and small bands allowing them to build communities and share news. And until January, he had a path laid out to finance the development of the business and a nationwide expansion. Then, however, his main investor backed out, leaving him reliant on his own cash to keep his website online. And for the past few months he has been finding it increasingly difficult to even get a hearing from other funders, let alone a commitment to invest.

"Securing investment is tough, probably the toughest challenge I've ever faced," said Jennings. "We have a great business and an awesome team but the current conditions make what was already hard even harder."

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A report by Atomico, an international investment firm, has found that tech funding in the UK alone saw investment drop by 22 percent last year.

Rising interest rates mean venture capital firms and wealthy investors now require higher returns from businesses who want their cash - and are prepared to take fewer risks.

"The primary driver is that as the interest rates go up, the value of stocks - most money that these companies get to make in the future - those numbers may still be the same exact numbers than when they were a year ago in terms of what they were projecting. But you discount them back by a much higher rate. When you discount something back in current numbers, the prices go down," said Hussein Kanji, an analyst at Hoxton Ventures.

His firm is focusing on companies that can discover completely new areas to work in, and therefore have the potential not only to be profitable but to become true tech giants.

Banking crisis

More recently, a new challenge has emerged for small businesses like Jennings'. America's Silicon Valley Bank (SVB) was a major partner for startups and small tech companies and its collapse has damaged confidence across the industry.

"I think it's really important to recognize how important SVB is in the tech ecosystem globally, particularly in the U.S. and in the UK. We as a business have many, many tech clients that use SVB, and this would have ripple effects for the economy globally," said Rajeeb Dey, CEO of Learnerbly, a training company.

So while the UK government is banking on the tech industry to help it close the economic growth gap with its major international competitors, companies like Jenning's Frenzi are struggling to find the funds they need to expand.

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