Invest Northern Ireland Chairman, Professor Fabian Monds, and Leslie Morrison, Chief Executive, briefed senior managers from across the North West yesterday in Londonderry about how it is helping local companies to achieve sustainable growth through a range of capability programmes and financial instruments including grants, equity and venture capital.
More than 60 managers attended the Invest NI briefing in the Tower Hotel on the agency’s recently launched Principles for Business Support and its approach to Venture Capital.
The event was part of a series of briefings for local business bodies and companies organised by Invest NI at centres across Northern Ireland over the next month. Other briefings are scheduled for Enniskillen (27 May); Belfast (30 May); Newry (3 June); and Ballymena (5 June).
Speaking at the event, Prof. Monds said: “These briefings provide a platform for business organisations, financial institutions and companies from the North West to discuss with us and understand the thinking behind two key documents, Principles for Business Support and the Approach to Venture Capital, that guide our assistance to companies. Both documents were published and circulated in March.
“For Invest NI to achieve its objective of promoting a more innovative and entrepreneurial economy, it is essential that we should provide effective services which companies and their advisers understand and can access easily.
“The Principles for Business Support have been developed to provide client companies with a coherent and integrated framework of assistance that covers programmes to develop capability and offers advice on access to and supply of funding, including venture capital,” he added.
In his presentation, Mr Morrison said Invest NI should not be seen as an equities house. Grants have not disappeared. Invest NI is keeping what was good from the legacy agencies but operating in a more flexible, focused, holistic and joined up way; and that support for companies is being refined to meet the needs of Northern Ireland’s changing economic challenges.
He said an appropriate capital structure is the starting point for any company’s development plan.
“In line with Invest NI’s strategic focus on building value in the economy by facilitating profitable growth, our engagement with an individual company seeking assistance will start with an analysis of the nature of the business and its future needs.
“In helping achieve realistic and sustainable growth targets, our client teams will work closely with management to establish business and financing plans. These will incorporate capital requirements and the need to develop capability in areas such as marketing, R&D, business improvement, external trade and e-enablement.
“In developing our approach, we have considered how companies finance themselves and when Invest NI, a Government-funded agency, should intervene. One issue on some clients’ minds that the Principles clarify is that of grants versus equity and repayables – free money versus capital that provides a direct return to taxpayers. We have made several important distinctions such as those between permanent and repayable capital, between programme-related finance and corporate finance, and between mobile and non-mobile investment. In addition, we have established how Invest NI should interact with private-sector financiers.”
Invest NI, Mr Morrison said, has now developed a portfolio of funding instruments that includes grants, ordinary shares, loans, preference shares, either convertible to ordinary shares, or non-convertible, and royalty-based mechanisms.
“We see venture capital not just as a source of finance but as an instrument of corporate governance that encourages and rewards promising start-ups to aim high and answer to their shareholders for results. The proactive involvement of an experienced venture -capital manager can also act as a catalyst for change in established companies and help engineer a step change in their development.
“While repayables and various forms of shares will continue to grow as a proportion of our funding mix, the biggest proportion of our expenditure will continue to be grant-based. The degree and form of our support will vary from case to case, but, in essence, it will emphasise building capability rather than capacity, understanding that certain projects will have components of each and that balanced judgements are required,” he said.
Barry Fitzsimons, Chairman of InterTradeIreland's EquityNetwork, welcomed the Invest NI briefings on business support in areas such as grants and private equity funding including venture capital.
“EquityNetwork is InterTradeIreland’s major initiative to help create and sustain a vibrant private equity market on the island. We work on an all- island basis promoting awareness of the availability of the sources of private equity and the benefits of using private equity.
"We see our role as one of ‘Education and Awareness’, educating SMEs as to what it takes to become ‘investor ready’ and also where they may find equity finance. We are very happy to be working alongside Invest Northern Ireland in the promotion of an equity culture here."