VCs could speed business investment – EV
Venture capital firm EV has called for fund managers to be allowed to play a role in delivering government support for small businesses.
The call from the firm, which has an office in Birmingham, comes after Chancellor George Osborne’s announcement in his autumn statement of £40bn loan guarantee support to be delivered through the banks.
Jonathan Diggines, the chief executive of EV, said that by allowing VCs to play a part in the process would open up access to investment funds for small firms much more quickly.
"The £40bn in loan guarantee support sounds great, however we have already seen vast sums put into the UK banks’ coffers, through QE and previous loan guarantee schemes, and the tangible benefits for small businesses have been imperceptible," he said.
"Hopefully the banks will use this to increase net new business and resist the temptation to apply the guarantees to existing SME clients; but from our experience, the take-up of loan guarantees by the banks has been low, despite their availability."
Diggines said another issue is that banks may be tempted to focus investment on the larger, more established businesses. "With SMEs defined as having a turnover of up to £50m, the concern is that the banks will limit their lending to those at the top end of the scale and therefore a huge number of true SMEs will not be considered," he said.
He added: "We would like to see a significant proportion of the small business support directed not just through the banks, but through proven fund managers who have the network and track record to show that they will not sit on the funds but can quickly put them to effective use."
EV has been investing more than £1m a month in start-up and early stage businesses. It also has offices in Manchester, Preston, Liverpool, Leeds.
