'Tremendous' response to £125m North East superfund

Feb 24 2010 by Peter McCusker, The Journal

MORE than 350 applications have been received from North East businesses looking for growth cash from the region's new taxpayer-backed £125m superfund since its launch one month ago.

With public sector funding likely to be squeezed in the coming years, the Finance for Business North East fund is seen as a vital cog in maintaining the North East’s momentum in encouraging entrepreneurial-driven growth.

And the response of the North East business community has been described as “tremendous” by the professionals charged with assessing the investment potential of businesses.

Andrew Mitchell, chief executive of North East Finance which will oversee the day-to-day running of the Finance for Business North East Fund, said: “We have been very encouraged by the strong interest shown in the fund, both at the launch event – which was standing room only – and by the number of applications since then.”

Newcastle-based NorthStar Equity Investors is one of the six fund managers and is responsible for investing in technology start-ups and established businesses.

Chief executive Marion Bernard said: “We have a tremendous amount of interest so far with 160 enquiries. These are from businesses who have formulated business plans and are looking for investment support to get started or grow.”

She went on to say that businesses looking for growth capital should always consider the traditional funding sources such as the banks or grants.

But she added: “In this recessionary climate we have businesses who are looking for adequate funding for growth.”

Ms Bernard went on to say that many enquiries are from the sectors in which the North East is strong, namely; software, digital, renewables, life sciences and healthcare.

Leading venture capitalist Robert Drummond is heading the Finance for Business North East Fund Investment Advisory Board. He said: “In the last few years we have seen the North East flower with new enterprise and industry and I have no doubt that there are many great small businesses which will put these new funds to good use.

“This point in the economic cycle is an excellent time to start a business. If you have the right skills and good business plan and can find the right investor then the advantages of lower costs, realistic expectations and less aggressive competition will help to ensure success.

“I am excited that the funds will be used to help young and small companies prosper and deliver good returns to the investors too.”

Mr Mitchell added: “As we would expect with any venture capital investment, it will take a couple of months to complete the process from application to first deals being done.

“The fund managers will carry out the proper due diligence businesses and the public would expect, given the significant amount of public money invested into the funds. That takes a little more time than an application for a grant or a loan.We are determined to support viable businesses with their future development plans and to achieve maximum return for the regional economy through the investments fund managers make.”