Cornwall and Isles of Scilly Investment Fund

The Cornwall and Isles of Scilly Local Enterprise Partnership (LEP) is working in partnership with the British Business Bank to create an Investment Fund for the CIoS LEP area. The fund, which would provide loans and equity investments rather than grants to help local businesses grow and create jobs, is seen as a vital tool to support the local economy after the UK has left the European Union in 2019.

A public funding package of just over £40 million is currently being put together, with funds from the LEP, Government and the EU Growth Programme.  The Government-owned British Business Bank will set up and operate the fund for the first 10 years.   This public fund is anticipated to unlock at least a further £40 million from private investment.   This will create a revolving investment fund to which businesses can apply for start-up and growth investment in perpetuity.

What is it?

  • Circa £40m (ERDF, Growing Places and BEIS) to create a fund providing debt and equity for growing SMEs in CIo
  • Investment and lending aimed at creating sustainable economic activity through supporting new and growing businesses
  • The opportunity to build a legacy for CIoS from successful investment and lending
  • The Government-owned British Business Bank will set up and operate the fund for the first 10 years

Why? (Market Need)

  • Market gap in the provision of debt and equity finance in CIoS
  • Access to finance as a much higher barrier to growth than the English average
  • An equity gap in start-up, early stage and development capital
  • High growth businesses unable to obtain finance from traditional sources with potential demand estimated to be approximately £61-£91m over the ERDF funding period
  • 1% of all UK SMEs v 0.1% of all UK equity deals

How?

Investment Strategy – Debt

To make debt finance available to growing businesses in CIoS that are unable to access debt finance from commercial sources due to a lack of collateral or track record, but have a viable business proposal

  • 50% of the Fund will be in the form of debt finance (approx £20m)
  • Loans between £25,000 and £1m
  • The Fund Manager will seek co-investment on a deal by deal basis
  • Flexibility to move funding from debt to equity and vice versa if economic circumstances change and/or the Fund’s performance justifies or requires

Investment Strategy – Equity

To make equity finance available to growing companies in CIoS that are unable to access equity finance

  • 50% of the Fund will be in the form of equity (approx £20m)
  • Equity funding between £50,000 and £2m
  • There will be some restrictions on the number of larger equity investments to ensure a spread of investments and to deliver ERDF output targets
  • The Fund Manager to seek co-investment on a deal by deal basis
  • Flexibility to move funding from equity to debt and vice versa if economic circumstances change and/or the Fund’s performance justifies or requires

When?

Milestones:

  • Market tested with prospective Fund Managers to ensure commerciality and deliverability (Spring-Summer 2017)
  • British Business Bank ERDF submission (August 2017)
  • Launch Fund Managerprocurement (Autumn 2017)
  • Aspiration is that money will be available to invest in SMEs early 2018

You can find further information here

Last updated: October 2017

 

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Cornwall and Isles of Scilly Local Enterprise Partnership, PO Box 723, Pydar House, Pydar Street, Truro, TR1 1XU

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