6th December 2021
Sean Hutchinson, Senior Investment Manager at British Business Bank, reflects on an active year for the Northern Powerhouse Investment Fund, discussing the importance of access to finance for small businesses, and how the Fund can continue to play a central role in building a stronger North in 2022.
It has been another active year for the Northern Powerhouse Investment Fund, as the Fund approaches its £300m investment milestone in the fourth year after launch. This year alone, in collaboration with our dedicated fund managers, we have delivered over 300 deals at a value of £87m, with an additional £145m leveraged from the private sector.
If anything, it has been a year of recovery and the levels of support provided has proven the importance of access to finance for small businesses. Finance plays a key role in helping them to sustain growth and in-turn realise their full potential, despite a turbulent economy impacted by COVID. In 2021 we have seen this across our portfolios, with organisations of all sizes and sectors leveraging our microfinance, debt and equity funds. In turn, this has helped to deliver new opportunities for regional business communities.
Debt Finance has been utilised by a wide range of companies during 2021, from wholesalers of eyelashes in Manchester, to international distributors of fast-moving consumer goods (FMCG) headquartered in Yorkshire and Greater Manchester. It continues to be a popular option for businesses looking to grow their operations, or pivot to new opportunities . Whether its buying new equipment, or adding new members to the team, debt financing can propel a business forward into the next stages of its growth.
Take international food and sweets distributor Candy Hero as an example. After securing a £250,000 NPIF – Mercia Debt Finance loan, the Bradford-based company has gone on to increase its stock lines and fulfil its growth plans. With sales growing by 68 per cent in 2020, and further growth expected to reach 30 per cent, the company also created five new jobs and was able to safeguard three existing roles. Supplying some of America and Asia’s most popular sweets, Candy Hero is now expanding into Europe. NPIF’s debt finance funds offer business loans from £100,000 up to £750,000, with 137 of these investments provided in 2021.
Microfinance also continues to be a popular option for businesses. Designed for early-stage and more established businesses, it is available for a wide range of purposes including filling gaps in working capital, funding expansion projects, leasing commercial premises and asset acquisitions.
Examples include Carlisle-based Bricks in Bloom. Starting out as a business that made Lego flower bouquets for weddings, it has quickly evolved into a UK leading Lego brick supplier. It secured a £75,000 loan from NPIF – BFS & MSIF Microfinance earlier this year and has utilised the funds to hire two new members of staff, open a pop-up shop and move to a new premises that is four times larger.
NPIF also delivered 19 equity finance deals this year, facilitating £30m of investment through our equity fund managers Maven and Mercia. There has been a lot of diversity in this area of the portfolio this year, in terms of stage, geography and sector. Examples this year range from a Yorkshire-based visual artificial intelligence company to a drug discovery company focused on the development of advanced life-saving anticoagulants. Equity funding is key for high-growth businesses, as it allows them to scale up their operations and expand their innovative capabilities.
Sheffield-based EdTech company Tutorful is a great example of this in action. Matching students with tutors via an online platform, the business quickly became a go-to source for tuition during lockdown and grew its revenues almost five-fold. Looking to grow even further, the business secured a £3m round with investment from NPIF – Mercia Equity Finance in September 2021 and has since expanded into new international markets and create around 27 additional jobs at its Sheffield headquarters.
As we look towards 2022 and how we can collectively build a stronger north, the power of accessible funding options for smaller businesses cannot be underplayed. The Northern Powerhouse Investment Fund will continue a central role in making that a reality, offering more than just finance, but support and guidance to some of the UK’s most exciting businesses. With the Chancellor pledging £660m into a successor Fund, we can expect many more businesses to grow and prosper and the North’s economy to fulfil its enormous potential.
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The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.
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