New fund heralds a bright future for business
by Andrew Mitchell, North East Finance
THE future looks bright for growing businesses in the North East. From next year, a new investment pot of £125m will be in place to deliver a shot-in-the-arm for SME finance.
It will provide much needed finance for local companies with the aim of driving growth, creating new jobs and wealth for the region.
The Joint European Resources for Micro to Medium Enterprises (JEREMIE) portfolio of funds comprises money from One North East, the European Investment Bank and the European Regional Development Fund. The fund will provide crucial access to finance for many regional SMEs at a critical time and help up to 1,000 companies over the next five years.
Nurturing our fast growing businesses is vital for the region's economic development. This has always been the case and, in the current climate, it's even more important. For young companies in extremely competitive markets, the continued tightening of bank and high street purse strings is inevitably making it more difficult to attract the finance required to expand and grow.
That's why the creation of a £125m super-fund for the region is such an important step.
It will help to fill the void left by more traditional sources of funding and ensure that the fastest growing regional businesses have a better opportunity to succeed.
JEREMIE will pump money into North East firms in three areas - early stage companies, technology-based businesses and growing more established businesses.
Returns made on these investments will be directed back into the fund to support more regional firms in the future.
This re-investment will help to create a sustainable fund and long-term legacy of support for regional businesses in the years to come.
Critically, the new fund will be responsive to market needs so that funding can be directed to specific sectors or a particular need as is required. This will be achieved through a number of individual funds which will make up the overall £125m portfolio.
The impact of funding on business prospects is clear to see over the past five years through the innovative use of finance by the North East Proof of Concept and Co-investment Funds. Both of these funds - along with the Design and Creative and Three Pillars Funds - were set up by North East Finance, when we were previously known as NStar. They have successfully demonstrated the importance of public intervention in meeting the equity gap faced by many SMEs.
The new JEREMIE fund will build on these achievements. The scope of companies able to benefit will be broader and the finance available potentially greater - making it a real asset for the North East.
Excellent progress is being made in shaping the structure of the fund to best meet the needs of SMEs. The process of identifying specific fund managers with the requisite skills, expertise and experience to manage each of the individual sub funds is well under way. A new board has also been put in place comprising some of the best finance and business brains in Britain to oversee the running of the fund.
We want to hit the ground running in 2010 and are in shape to do that. The resources at our disposal are a fantastic opportunity to make a real difference to those innovative and pioneering SMEs based here and the region as a whole.
Some of the names in this year's Fastest 50 have benefited from the funds already in place. Many more should soon be in a position to receive fresh investment thanks to the JEREMIE money.