£400m fund to help get smaller firms off ground

AN INVESTMENT fund that has supported more than 700 businesses and created over 4,000 jobs across the Midlands has launched another round of capital. The first round of the Midlands Engine Investment Fund (MEIF) was opened by the British Business Bank to much fanfare in 2017 since when the £300 million war chest has supported small companies across the west and east of the region.

Now, a second round is opening for applications, this time with £400 million earmarked by the government-owned bank to support young and growing companies across the Midlands.

MEIF II is split into three different sections, offering loans from £25,000 to £2 million, debt finance from £100,000 to £2 million and equity investments up to £5 million, with the bank becoming a shareholder. The new fund is aimed at helping hundreds of businesses achieve their potential and increase the supply and diversity of early-stage finance by providing options that companies might otherwise not be offered.

The capital is designed to help smaller businesses with activities including expansion, product or service innovation, new processes, skills development and capital equipment.

Among the West Midlands businesses to have received MEIF capital recently are Vanti, which specialises in integrating technology within buildings, OneUp Sales, whose platform helps clients to manage sales teams, and entrepreneur and Dragons’ Den ‘graduate’ Kameese Davis who secured backing for her haircare brand Nylah’s Naturals.

Louis Taylor is chief executive of the British Business Bank, which was set up in 2014 as a state-owned economic development body to increase the supply of credit to small businesses and which is owned by the Department for Business and Trade.

He said: “The MEIF is for those next-stage companies which have started up but may need some working capital or long-term investment which can be provided through equity.

“We had good success with the first fund and see the demand is there. It has generated 4,500 jobs through investing in 739 small businesses so far and we want to have a similar impact with this one but scaled up to reflect the larger size of the new fund.

“It is not just about the companies we are helping and the jobs created, the other impact we want to have is catalytic on the investor community.

“Part of the reason why there is a disparity in provision of capital across the UK, skewed towards the South East, is the presence of an investment community.

“We want to show investors you can make good money in provincial areas of the UK and that they should base themselves there and seek those opportunities.

“Investing in the regional economies is a good thing to do and you can generate good returns.”

As part of the launch, five managers have also been appointed to operate the funds and carry out due diligence on applicants.

They are Wolverhampton-based BCRS Business Loans and First Enterprise – Enterprise Loans in Nottingham, which are both administering small loans, from £25,000 to £100,000.

Birmingham-based Frontier Development Capital and Glasgowheadquartered firm Maven Capital Partners will be responsible for larger loans, from £100,000 to £2 million, while Mercia Ventures in Henley-inArden will manage equity deals up to £5 million.

Looking ahead, will there be a round three?

“It is theoretically infinite but we want to have that catalytic effect and to get private-sector players involved,” Mr Taylor said.

“Success for the bank is we end up having enough of that said effect so the private sector then sees the opportunities and the government can stand back. We shouldn’t be owning the market here as a government, this has to be a commercial endeavour in the end.”