Chancellor Rishi Sunak has announced a £200m regional fund for the South West as a key part of the Government’s commitment to overcoming regional imbalances specifically in access to finance for SMEs.
The new fund, announced as part of the Spending Review and Autumn Budget, will provide significant scale growth capital for businesses and offer a combination of debt and equity funding to help businesses grow and create jobs.
Delivered by the British Business Bank, this builds on the success of the existing regional funds in operation since 2017 including the Cornwall and Isles of Scilly Investment Fund (CIOSIF) which was launched in 2018 and was set up by the British Business Bank and the Cornwall and Isles of Scilly Local Enterprise Partnership (LEP).
The regional funds have helped address market failures in access to finance, and are demonstrably effective in supporting regional economic growth, through supporting the creation of high-paying high productivity jobs, upskilling existing workforces, and supporting the scaling up of regional businesses.
The new South West fund will build on the success of the CIOSIF across the wider region. To date the CIOSIF has invested £8.2m in 35 businesses, attracting £16.2m of additional finance and is forecast to create about 400 jobs.
Among its most recent investments is a £500,000 equity stake in Cornish sustainable packaging business Flexi-Hex as part of a £1.25m funding round. The new fund is Government funded and its design is subject to consultation with stakeholders.
Catherine Lewis La Torre, chief executive of British Business Bank, said: “Our regional funds are focused on those areas of the country where securing access to finance for small businesses is the most challenging.
“We have seen how these funds address those market weaknesses and help change perceptions among businesses and other investors about investment opportunities in the regions. Our Cornwall and Isles of Scilly Fund continues to invest in the region and we welcome the opportunity to support smaller business in the wider South West region.”
LEP non-executive director John Acornley, who chairs the CIOSIF Advisory Board, said: “The LEP worked very hard to establish a fund for Cornwall and the Isles of Scilly because we knew there was a significant market gap in debt and equity finance.
“We’re delighted that the British Business Bank can now build on our achievements with a new fund for the South West as Cornwall will benefit from a thriving regional economy, with more opportunities for business growth and job creation especially in the post-pandemic recovery.”
Dan Pritchard, co-founder of Tech South West, said: “We welcome the new South West Investment Fund and on behalf of our members will work with the Government to ensure that it is successfully set up and deployed to maximise this opportunity. It has to target our most promising tech companies across the whole region.
“Tech South West works for the whole region and we’ve very aware of the challenge of accessing investment at times. It’s not about who shouts the loudest, it’s about how we accelerate growth in the best and most sustainable way for the benefit of the region and the UK.”
Business Live’s South West Business Reporter is William Telford. William has more than a decade’s experience reporting on the business scene in Plymouth and the South West. He is based in Plymouth but covers the entire region.
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The British Business Bank’s three regional funds – the Northern Powerhouse Investment Fund, the Midlands Engine Investment Fund, and the Cornwall and Isles of Scilly Fund – and the Northern Ireland Growth Finance Fund have delivered over £1bn of public and private sector funding to smaller businesses in those regions, helping to address regional funding gaps.
The Government said it recognises the success of these funds in its £1.6bn commitment to a next generation of funds:
£660m for the Northern Powerhouse Investment Fund, including an expansion into the North East of England
£400m for the Midlands Engine Investment Fund
£200m to provide a new fund for businesses in the South West of England, building on the Cornwall and Isles of Scilly Investment Fund.
£150m to provide a new fund for Scottish businesses
£130m to provide a new fund for Welsh businesses
£70m to expand provision for businesses in Northern Ireland