Record year of investment for Enterprise Ventures

FUND manager Enterprise Ventures has reported another record year in 2012, with £23.6m invested in over 160 small businesses across the UK regions.

EV, which has offices in Liverpool, Manchester, Preston and in Dodsworth, south Yorkshire, said it is seeing strong demand for finance from small businesses.

Its 2012 investment figure was up £4.2m on the previous year and while the number of deals was largely unchanged, average transaction size rose from £110,000 to £143,000,reflecting an increase in the number of quality applications, particularly from maturing companies seeking capital for growth.
 
EV says demand has risen as alternative sources of funding appear to have dried up. During 2012 bank lending to businesses, particularly small firms, fell to its lowest levels since the start of the credit crunch.
 
The group manages around £130m in funds, including The North West Fund for Venture Capital, Lancashire’s Rosebud Fund, the Finance Yorkshire Seedcorn Fund and Small Business Loans Funds and the Coalfields Funds.
 
Chief Executive Jonathan Diggines said: “Loan and venture capital funds are playing a key role in keeping the credit market open for small firms. In some cases, we find our support can unlock access to the bank funding that was originally denied. Banks can sometimes be persuaded to lend if they can share the risk with another investor.”
 
He believes one of the reasons Government initiatives to help small firms have so far failed to make the desired impact was that they focused on channelling finance through the banks.
 
“At a time when the banks are under pressure to build reserves, the long term outcome will be that they lend less, not more. Banks prefer to lend to larger corporates.

“Even where they do lend to SMEs, they tend to avoid those with less than £10m turnover and offer asset finance or invoice discounting, rather than the long-term, ‘patient capital’ that small companies need. Traditional bank term loans and overdraft facilities have all but disappeared for small companies.
 
“We need a different approach to make more funding available for small businesses. 2013 will see more activity from venture capitalists and community funding providers such as community development finance institutions, which will lead to new players emerging. The ones that make a difference will be the investors that specialise in this market and understand small company needs.”

EV said that former MD Richard Bamford, who led the 2002 buyout of the business from Enterprise plc in 2002, had stepped down as a non-executive director and sold his shares to the management team.

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