£150m Investment Fund for Scotland preparing for summer launch
British Business Bank invites proposals from potential fund managers to operate new fund
The British Business Bank is on course to launch a £150m investment fund this summer, aimed at driving the growth of small and medium-sized businesses in Scotland.
The Investment Fund for Scotland is one of a series of Nations and Regions Investment Funds being launched by the British Business Bank which will deliver a £1.6bn commitment of new funding to smaller businesses across the UK. The fund will offer a range of commercial finance options with loans from £25,000 to £2m and equity investment of up to £5m.
By increasing the supply and diversity of early-stage finance for smaller businesses in Scotland, it aims to tackle an identified funding gap. Similar funds are planned for Wales, Northern Ireland and the South West of England, along with follow-on funds for the Midlands and the North of England.
The new funds follow the success of the regional investment funds already being delivered by the British Business Bank through the Northern Powerhouse Investment Fund (NPIF), Midlands Engine Investment Fund (MEIF), Growth Finance Fund (NI) and Cornwall and the Isles of Scilly Investment Fund (CIoSIF).
Since the existing investment funds launched, the Bank has invested over £605 million into the areas covered by NPIF, MEIF, CIoSIF, and NI, crowding in over £825 million in additional private sector co-investment and supporting over 1,650 smaller businesses.
Ken Cooper, managing director, Venture Solutions, at the British Business Bank, said: “The new Investment Fund for Scotland builds on the success of the Bank’s existing regional funds and is designed to increase the supply and diversity of finance available to smaller businesses in Scotland.
Our aim is to reduce imbalances and break down barriers that small firms may face in accessing finance, creating a more level playing field. Given the geographical spread of Scotland’s smaller business population, connecting with entrepreneurs in some of the more rural and hard-to-reach areas will be an important focus of the fund.
While we have seen an encouraging stream of equity deals into Scottish firms over the past couple of years, the overall levels of equity investment and also private debt lending remain much lower than Scotland’s share of the UK’s small business population. We’ll be working closely with the local small business finance ecosystem to ensure the fund provides support to innovative, ambitious business owners across the country.”
The Investment Fund for Scotland will operate across three tiers: smaller loans (£25k-£100k), debt (£100k-£2m) and equity (up to £5m).
Request for proposals from potential fund managers
The British Business Bank is now inviting proposals from potential fund managers to operate the new Investment Fund for Scotland via its website. It expects to appoint fund managers in Spring 2023 ahead of launching in the summer.
The British Business Bank is responsible for administering the Nations and Regions Investment Funds on behalf of the UK government. The Bank is establishing investment funds in areas not currently served by the Bank’s existing regional funding programme before launching follow-on investment funds in existing fund areas.
