The prime minister Gordon Brown has promised a new fund for growing businesses as government research finds a new equity gap.
The prime minister Gordon Brown has promised a new fund for growing businesses as government research finds a new equity gap.
Brown says, ‘We have too many small and high growth companies that need capital to grow – and therefore better access to finance.’
The Rowlands Growth Capital Review, published this week, concludes that there is a ‘permanent gap’ for businesses looking to raise between £2 million and £10 million in investment, and that neither banks nor venture capitalists are likely to fill it.
The proposal for a new government-backed growth fund is on top of existing measures already in place, including the UK Innovation Investment Fund, which aims to raise up to £1 billion to invest in technology businesses at all stages of development, and the £75 million Capital for Enterprise Fund, which was designed to help growing businesses unable to raise funding because of the credit crunch.
James Caan, star of BBC show Dragons’ Den and member of the advisory panel for the Rowlands review, comments, ‘The report shows that we have an urgent need to support UK small businesses in finding finance, especially as our economy recovers. I am glad to see the government committed to working with the private sector to ensure that this happens.’
The existence of an equity gap for businesses seeking between £250,000 and £2 million of finance has been a basis for government policy since the 1990s.
