Insider Media Limited

The government's Birmingham-based Business Growth Fund (BGF) will invest in businesses whose turnover falls short of its original £10m threshold, the fund's head of investments has exclusively told Insider.

Richard Bishop said the £2.5bn fund has received approaches from companies at all stages of development – and turnover will not be a make-or-break factor.

"We've looked at a number of businesses whose turnover is in the £5m to £10m range," he said. "The key investment criteria are that they are growing strongly, have a need for capital and are looking for a willing partner.

"What we're looking for is established businesses that have achieved a certain scale and are looking for the next stage of growth. And to do that they need capital. If their turnover happens to fall in the £5m to £10m bracket then we're still very happy to look at it."

The BGF was launched by the government and British Bankers' Association in May to make investments of between £2m and £10m in companies, in return for an equity stake ranging from 10 per cent to 50 per cent. It is backed by Barclays, HSBC, Lloyds, Royal Bank of Scotland and Standard Chartered.

However, it attracted criticism for only being accessible to businesses with an annual turnover of between £10m and £100m, meaning many smaller businesses would be excluded.

Entrepreneur and former Dragons' Den star James Caan expressed his concern to Insider in June saying the BGF should operate a lower threshold to counter an "equity gap" that has developed.

But former 3i partner Bishop said that the overall investment case will be the key factor in determining investments. He added that the biggest demand for finance has so far been in the £2m to £5m range, but discussions are ongoing with businesses about investments at the higher end of the fund's range.

Earlier this month, the fund appointed four non-executive board members – Audrey Baxter, chief executive of Baxters Food; Stephen Murphy group chief executive of Virgin; Neil Johnson, chairman of Umeco and Hornby; and John Burgess, cofounder and managing partner of BC Partners.