Venture capitalist EV is calling for fund managers to be allowed
to play a role in delivering government support for small
businesses.
It comes after Chancellor George Osborne's announcement in his
autumn statement of £40bn loan guarantee support to be
delivered through the banks.
EV's Chief Executive Jonathan Diggines says allowing VCs to play
a part in the process would open up access to investment funds for
small firms much more quickly.
Jonathan, who is also Chairman of the Community Development
Finance Association and a former council member of the British
Venture Capital Association, says: "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.
"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."
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,"
adds Jonathan.
EV, which has an office in Birmingham, specialises in the small
firms market and has been investing more than £1m a month in
start-up and early stage businesses. It currently manages funds
with an aggregate value of £130m on behalf of both public and
private sector clients, but believes there is scope to invest much
more.
Jonathan Diggines adds: "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.`'