Regionally-based funders will play a key role in rebalancing the UK economy away from London and strengthening the economies of Northern city regions, according to independent new research undertaken by Big Issue Invest on behalf of Enterprise Ventures.
The independent study identifies specific ways to create a more balanced economy – by investing in SMEs in the regions, concentrating on deprived areas and focusing on priority sectors, such as manufacturing and export.
It then measures Enterprise Ventures’ performance against each of these areas. It is the first time this innovative analysis has been used to assess the ‘social value’ created by a venture capitalist.
The results show that the majority of Enterprise Ventures’ 400-plus loans and investments have gone into the most deprived regions in the UK.
The venture capitalist believes that its most important role will be to help build a regional platform for SME investment outside the South East.
The Big Issue Invest report also suggests that finance providers should remember – and recreate – the role that private investors played in building the industrial communities of the North.
Tim Hames, director general of the BVCA described the report as “an innovation” and Enterprise Ventures as “an extraordinary institution”.
He said: “There will be very, very few businesses of any kind which score as strongly in the social realm as Enterprise Ventures has done in this inquiry.
“It is to be hoped that the content of its crusade as well as the character of this survey will be replicated by others.”
Jonathan Diggines, chief executive of Enterprise Ventures, said: “We have invested £344m in nearly 850 SMEs since 2002 and wanted to understand the wider social value that our investments have created.
“We strongly believe that this report gives some indication of the fundamental part that venture capital investment must play in rebalancing the UK’s regional economies.
“With devolution firmly on the agenda, now is the time for Northern cities to re-establish themselves as economic powerhouses, and the investment community has a critical role to play in helping them to achieve that.”