Entrepreneurs seeking finance to grow their business have been thrown a lifeline by the North of Tyne Combined Authority.
A £15million fund for investment in small businesses and social enterprises was announced by leaders at the latest meeting of the North of Tyne cabinet.
Mayor Jamie Driscoll said the fund would make it easier for small businesses to gain the sums needed to develop and would keep investment money within the North of Tyne region.
The £15 million is split into a £10 million equity and venture capital fund to support innovation and growth, and a £4 million social finance fund to invest in and support businesses and employee-owned initiatives designed to tackle social and environmental problems.
Further funds will be used to ensure local businesses are aware of the range of finance options available to businesses in the North of Tyne.
This new investment bolsters more than £50m already invested in the growth of key sectors in Newcastle, North Tyneside and Northumberland, including in the green economy, digital, healthy ageing, life sciences and health, and culture, tourism and leisure.
Mayor of the North of Tyne Jamie Driscoll said:
“This new investment will give people of ordinary means a chance to be their own boss
“Backed by £15 million over five years from our Investment Fund, it will boost small business growth. And it will recycle local capital, keeping wealth in our region.
“It has the heft required to make a real difference. There’s £10 million in the package for equity investment – a challenge the North East faces. Although we account for 2.3% of the UK economy, only 1.4% of the total UK private equity and venture capital is invested here.
By having a fund to directly invest in small, local firms, start-ups and scale-ups, we can accelerate the economic recovery. As the fund grows, the money will be recycled, supporting more local firms, and creating more jobs here.
“For cooperatives, and businesses trading with a social purpose, it’s even harder. Investors expect a vote in your business, and the legal structure of worker-owned or community-owned businesses often prevents that. So we’ve made £4 million available to directly invest in these businesses, as a source of patient capital to help them grow.”
Mayor Driscoll, who is the North of Tyne Cabinet Member for Social Economy and Communities, said each investment made would be underpinned by the strong ethical values of the North of Tyne Combined Authority.
North of Tyne Cabinet Member for Investment and Resources and Deputy Mayor of North Tyneside Council Cllr Carl Johnson said:
“Businesses, large and small, whether they are just starting or looking to expand, require access to timely finance and loans.
“Many based in our region are not adequately served by our existing and heavily centralised financial institutions. This is especially the case for SMEs that are looking to innovate in our growth sectors and for Social Enterprises and Co-operatives looking to tackle the social and environmental problems we face.
“By establishing these funds for the North of Tyne, we are supporting the growth and renewal of our economy, promoting innovation, and creating and sustaining the good jobs and services that our communities require.”