Funds help finance businesses which are fast-growing
Andrew Mitchell, chief executive of North East Finance
THE Fastest 50 always highlights the innovation, enterprise and ambition of North East companies.
The businesses that make up this list are making their mark in the global market and deserve our congratulations for the success and growth they have achieved.
They are flying the flag for the region around the world and demonstrate what can be achieved in the North East. The good news for ambitious companies with strong prospects and good ideas is that the opportunities for success have never been better in this region.
Since January this year, the Finance for Business North East Fund, overseen by North East Finance, has been up and running to provide much-needed investment finance for ambitious high-growth companies.
The publicly-backed £125m fund – which comprises six individual investment funds – was the first of its kind in England and is the fruit of several years’ hard work on the part of North East Finance and a specialist team from regional development agency One North East.
Over the next five years, these funds will invest in more than 850 businesses helping North East companies to create a significant number of jobs.
Although it’s still early days, the impact has been immediate. In the first six months alone, 35 deals were completed totalling more than £8m and leveraging a further £9m from the private sector – proof that public and private finance can work in harmony.
We anticipated something of a bow-wave effect given the pent-up demand for funding since the start of the credit crunch and the approach the banks have been taking to backing the early stage end of the market. However, our fund managers have been impressed by the quality of the deals and have received in excess of 700 applications.
This money is now driving the growth plans of businesses of the calibre of Gateshead-based games developer Eutechnyx, which is creating a new generation of online games. It is also helping to pioneer a materials-loading system being developed by Xena Systems on Teesside, and bio-science applications for stem cells and in-vitro cell culture that are being created by Reinnervate in Durham.
There’s lots of scope for early-stage investments in the North East. That’s proven by the number of exciting deals completed so far, and the funds are having exactly the sort of positive impact in stimulating deal making that was anticipated.
They have added a noticeable urgency to the market and to see more than 30 deals completed in six months is a good return. The average number of annual deals over the last 10-20 years has been around the one hundred mark.
In the absence of these funds, many of these deals simply wouldn’t have happened.
The fact is that the majority of private-equity and venture-capital investment happens in London because that’s where the fund managers have historically been based. The public funds we now have are helping to change this and fill the gap here in the North East.
We’ve demonstrated through Finance for Business North East that publicly-backed regional investment funds work. More significantly perhaps, we have shown that private investors (both institutions and business angels) are happy to invest money alongside these public funds to create businesses and jobs.
At a time when finance is tight, this is a massive boost for the region and our fast-growing and ambitious businesses of tomorrow. We have an opportunity to show the rest of the UK the way forward and are well on our way to doing that as well as building the region’s economy.
For more information about the Finance for Business North East Fund visit www.northeastfinance.org
