One year on: An inside look into the North East Fund
Today marks the anniversary of the North East Fund. How has the first year gone, what businesses have benefitted, and what plans are in store for the future?
BLM speaks to Jason Hobbs, CEO of the North East Fund, about its purpose, its challenges, and its future plans.
What was the vision for the North East Fund? What was it supposed to achieve?
Our vision is for the North East to be a vibrant place for businesses to start up and grow, and for that to happen, companies must have access to the finance they require.
Unfortunately, this region has, historically, not been particularly well served by the traditional providers of capital, hence the rationale for creating and implementing the North East Fund. We want to ensure that investment finance is readily available for North East businesses to encourage and support growth, thereby increasing both employment and economic prosperity in the region.
How well do you feel you’ve achieved those aims so far?
While it is still early days for the Fund, I feel we are well on the way. Over 120 businesses have received investment in the first year alone, with over £40m of funding having been provided either directly or in conjunction with co-investment partners.
The success of our predecessor, the JEREMIE Fund, shows just how important these types of initiatives are to our region and what they can achieve. The JEREMIE Fund invested £160m, leveraged in a further £300m of private capital, supported over 900 businesses and either created or safeguarded some 8,000 jobs. If we can emulate that success, then we will certainly have achieved our objectives.
Are there any areas for improvement?
At the moment, we’re ensuring that awareness of the North East Fund and the opportunities that it presents, is high throughout the region, from the south of Durham to the North of Northumberland.
While we are confident that the message is reaching the urban areas of Newcastle, Sunderland and Durham, it can require a different approach for other parts of the region. Therefore, it’s our duty to make sure that all businesses in the North East, whether in North Tyneside, South Tyneside or wherever, have the same opportunity to access the funds they require to deliver on growth plans and generate increased economic prosperity for the region as a whole.
How have you found the experience of running the North East Fund?
It’s great and a very fulfilling experience knowing that what we do on a day-to-day basis can make a real difference to local businesses. I’m very fortunate to work with a great team of individuals who share the same goals, but it’s not just us who contribute to the fund’s impact.
The North East Fund is a regional asset and its success depends on a wide range of stakeholders including partner fund managers, the local advisory community, funding providers such as the European Regional Development Fund, the Local Enterprise Partnership and the seven local authorities, all of whom have been incredibly supportive from conception and development to the launch one year ago.
What have been some of your favourite investments?
That’s a difficult question. We have over one hundred deals completed to date across a wide variety of industries and all with so many great stories to tell. Hopefully, many will go on to become cornerstones of the North East economy for years to come.
Just by way of example, we have invested in spinouts from our excellent universities such as Hexis Lab and Magnitude Biosciences, through to more established businesses such as Eminent Engineering and UK Metalcraft, both of whom are employing more people as a result of our investment.
Then, there are companies who are making huge contributions to the low carbon economy such as AVID Technology in Cramlington, as well as those in the medical sector including Sunderland-based Arquer Diagnostics and Ibex Innovations located on Durham’s NETpark, who, through ground-breaking innovation, will make a positive impact on many people’s lives.
What is the fund’s focus for its second year?
More of the same drive and ambition, supporting local companies in their business growth and providing access to the right finance when they need it. We’ve made a really positive start since our launch last year so I’m very confident that the Fund will achieve what it set out to achieve.
We have set ourselves a target of investing in 600 businesses over the course of five years, so it is clear that we are looking for a lot of companies. My message to North East businesses is therefore to make the most of this opportunity – talk to our fund managers about accessing the finance that could make a huge difference to your company’s future.
What are your thoughts on entrepreneurship and the North East economy? What are some of the opportunities and challenges for new businesses?
We see so many great businesses that it is impossible not to feel optimistic about the future of the North East economy, especially given the talent and entrepreneurship that exists here. Whilst as a nation, we have a tendency to underplay the importance of our entrepreneurs and business leaders, we, as a Fund, are fully committed to supporting their ambition and backing home-grown companies often at the forefront of their industry or operating on a global scale.
The North East Fund presents a wonderful opportunity for these businesses, but it is not something that has been created overnight. It is just the latest in a sequence of funds that have been established to support SMEs over the course of the past 15 years.
The challenge now, as a region despite the current economic climate, is to ensure that the momentum which has been created, that has allowed an entrepreneurial culture to flourish and businesses to prosper, continues way beyond the life of the current fund. This means that European funding must be replaced so that finance is available for the next generation of entrepreneurs and to allow our current businesses to continue their growth trajectories.
What advice would you give to North East businesses seeking funding?
Quite simply to pick up the phone and talk to us or one of our fund management companies: Northstar Ventures, NEL Fund Managers, Maven Capital Partners and Mercia. They’re very keen to stress that most of their deals start with a conversation, either on the phone or over a cup of coffee, and that it’s not necessary to have a fully-formed business plan beforehand. We have purposely made the North East Fund as accessible as possible, so my one piece of advice would be to start that conversation. We are here to support North East SMEs so why shouldn’t your business be our next investment?