Money, money, money.
No, not the ABBA song but rather the biggest challenge facing business today.
Founders are finding it difficult to raise money as investors batten down hatches against a backdrop of high interest rates and continued economic uncertainty.
High net worth individuals (HNWIs) are choosing to sit on their money as investment periods get stretched from four or five years to seven or eight.
Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) are expected to be down by between 30-40 per cent this year.
Hardly surprising then that the launch today by the British Business Bank of its new £660m Northern Powerhouse Investment Fund II has been greeted with so much joy and relief.
The British Business Bank is different to other banks. For a start it’s wholly owned by the Department for Business and Trade and is aimed at helping the UK’s small businesses survive and hopefully thrive.
Since the launch of the first Northern Powerhouse Investment Fund in 2017, over £1bn of direct and private sector co-investment has been facilitated to businesses.
Compared to London, the North already gets the thin end of the wedge when it comes to investment with an estimated 80 per cent of VC money pouring into London, compared to the 3 per cent that trickles into the North.
The potential impact of the £660m Northern Powerhouse Investment Fund II can’t be under-estimated, especially to founders struggling to raise money.
As well as continuing to invest in companies operating within the North West, Yorkshire and the Humber and Tees Valley, it has now been expanded to include the whole of the North East.
Nine fund managers have been appointed to manage the Northern Powerhouse Investment Fund II, which can be broken down into micro loans; debt finance; and equity investment.
In the North West, GC Business Finance and River Capital will manage the smaller loans part of the fund (£25,000 to £100,000), FW Capital will be responsible for larger loans (£100,000 to £2m) and Praetura Ventures will manage equity deals (up to £5m).
In Yorkshire and the Humber, Mercia will deliver debt finance (£100,000 to £2m), as well as equity finance (up to £5m) to smaller businesses with Business Enterprise Fund (BEF) delivering smaller loans between £25,000 and £100,000.
With NPIF II now set to cover the entire North East, NEL Fund Managers (NEL) will provide both smaller loans (£25,000 to £100,000) and debt finance (£100,000 to £2m) to North East businesses with Maven Capital Partners managing equity deals up to £5m.
The Northern Powerhouse Investment Fund II is spread over five years, thereby providing much-needed certainty in an uncertain world.