In 2010, Invest NI created a suite of funds which now totals more than £170 million to help SMEs with high growth potential to forge ahead and drive rapid growth within their business. These funds, a mix of loans and equity finance, are helping to fill the funding gap that has been created by a tightening of bank lending and changes to EU grant policy. We have been able to do this with part financing from the European Regional Development Fund.
The funds are part of our Access to Finance initiative and can support deals from start-up level right the way through to development capital.
2014/15 is the first full year that all elements of our Access to Finance initiatives have been available. These funds include four equity funds and two loan funds which provide funding to SMEs from start up through to the growth phase. Businesses that receive these funds will have high growth potential and are scalable through export markets. These funds provide finance which help local businesses achieve their ambitions through funding costs such as research and development, product development, marketing, equipment purchases and working capital.
Each fund is managed by an independent, experienced Financial Conduct Authority approved fund manager on a fully commercial basis. Within the terms of the fund, the fund manager is responsible for assessing applications and approving investments. In some cases Invest NI is the sole provider of investment to the fund, in others we are one of several investors.
Total investment is both Invest NI investment (£17.7m) and private leverage investment (£22.1m) (including NISPO). It is not possible to compare the number of deals or sums invested by each fund as the parameters of each are different.
“The support we received from the NI Small Business Loan Fund has been instrumental in helping to develop our business, fulfilling bigger orders and putting us on track for future expansion.” Lorraine McAleer, Manager of Learning Space NI
Having access to Invest NI’s Access to Finance funds provides companies with a very significant boost which supports the Northern Ireland economy and represents a further increase in funding as our initiatives mature.
Two years into its five year lifespan the Small Business Loan Fund has been a real success providing much needed access to funds to a wide range of businesses across Northern Ireland. The fund continues to attract strong interest and remains an important part of our Access to Finance portfolio.
The Growth Loan Fund, launched in 2012, has also been a great success, providing loan finance to local small and medium-sized businesses. Businesses that were unsuccessful in securing private sector funding have been able to access the capital required to exploit growth and export opportunities. This vital funding has also enabled businesses to invest in new equipment, recruit new staff and drive growth in export markets.
“This investment from the Growth Loan Fund will support our global marketing plans and enable us to meet working capital needs as the business transitions from in season selling to forward orders. We also have plans to take on up to 12 more staff to help meet growing demand.” Celine Magill, Managing Director, Art on Fashion
Co-Fund NI was launched in 2011 and co-invests alongside business angels and other private investors at a ratio of up to 50%. During the past year, this fund has invested in 24 deals resulting in over £9m of new funding being invested into growth focused SMEs.
TechStart NI is made up of a number of funding components aimed at early stage and seed SMEs. This fund is playing an important role in supporting businesses to accelerate the development of their products. In addition to this investment activity, Techstart NI provides proof of concept grants and investment support.
Launched in 2013 both Crescent III and Bank of Ireland Kernel Capital Growth Fund (NI) are in their early stages but interest has been high. The Development Funds have offered over £4m of equity funding, supporting businesses in developing new products, targeting new markets and strengthening their management teams.
“Kernel Capital has a strong track record of investing with high growth export focused innovative companies. We look forward to Kernel Capital’s strategic and hands-on input as we scale the company, increasing our exports and creating further employment in Northern Ireland.” Hugh Cormican, CEO Cirdan Imaging
Invest NI also supports the management costs of the Halo business angel network, which is managed by the Northern Ireland Science Park. During the year 2014/2015 Halo business angel activity led to investment of £5.2m in 12 deals, complementing the investment activity of the suite of Invest NI funds.
We will continue to review our offerings and tailor them to what the market needs, helping to bring forward new funds in a timely way to ensure that SMEs have the funding they need to achieve their growth objectives.