We need a National Renewal Fund to help companies fulfil their potential - Stephen Welton
Not only are we facing a national health crisis, but our economy has also taken a devastating hit.
The long-term effect of this economic blow cannot be overestimated. That is why we need to act now and protect this country’s economic dynamism – in particular the small and medium-sized businesses needed most for our economy to tick.
I’m proud to say we have invested £300m in Yorkshire-based companies. These span a wide range of sectors, from fast growing retailer Buy it Direct to leading leisure destination Yorkshire Wildlife Park. They include education firms such as Operam Education Group and 365 Response, a Wakefield-based technology business that provides essential transport management software to the NHS.
These are all dynamic, innovative, well-run businesses. They have the potential to grow to become national and international champions. They simply need funding to help them get there.
These companies comprise the “growth economy”.
There are roughly 21,400 businesses across the country in this category. They report turnover of between £2.5-100m a year and they have, on average, grown at twice the pace of GDP in recent years.
Following the global financial crisis, BGF was established to provide equity finance nationwide for firms that were struggling to access the funding they needed due to the credit crunch. Since then, we have backed about 350 companies from across the UK, investing £2.5bn, providing long-term, patient funding to help companies grow at a pace that’s right for them.
Sadly, there was already a significant shortfall in funding available for growth economy companies prior to the pandemic. In a report I have co-authored with the eminent historian Sir Anthony Seldon, we show that the shortfall has been recognised as a national challenge for more than 90 years.
However, due to the pandemic, the already limited sources of funding available for the growth economy are fast drying up. There is now a real risk that growth economy companies will be severely constrained and unable to fulfil their potential. That means missing out on the innovation, imagination and job creation these businesses are capable of.
But there is another way. If we unlock funding for the growth economy, and allocate it effectively around the country via a network of regional specialists, arranging investment solely on commercial terms, then we have a fantastic opportunity. In our report, we outline a plan for a £15bn National Renewal Fund made up of contributions from the pensions industry, insurers, quoted investment vehicles and Government.
At BGF, we’re making the first move alongside Coutts, by launching fundraising for the UK Enterprise Fund.
This fund will channel investment from Coutts’ clients into diverse and high potential growth economy companies across all regions of the UK, with a special focus on female entrepreneurs.
Yorkshire businesses will be a crucial part of this national effort to not only get our economy back on its feet, but to back the businesses that will drive prosperity.
We see this fund as the first step on what I hope will be a collaboration between Government, business and investors to channel equity funding to the growth economy, and propel a nationwide and sustained upwards trajectory in economic growth.
Yorkshire has been one of the most active investment areas for BGF over the last 10 years; our aim is to make sure we don’t lose that momentum. With the right funding to match the obvious talent, there is reason for real optimism. But it means those with the risk capital put it to work, now.
By Stephen Welton - Executive Chairman of BGF