Record year for Enterprise Ventures: £23.6m invested in 2012

By January 3, 2013Finance, News

Enterprise Ventures has reported another record year in 2012, with £23.6m invested in over 160 small businesses across the UK regions – effectively one transaction every two working days.

This compares to a total of £19.4m invested in 2011. While the number of deals remained almost the same as last year, 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.

The company says that demand has risen as alternative sources of funding appear to have dried up. During 2012 bank lending to businesses reached its lowest levels since the onset of the credit crunch – with small businesses most affected.

Enterprise Ventures 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.”

Jonathan Diggines said that one of the reasons government initiatives to help small firms had 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 CDFIs, 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.”

 

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