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New £10 million property fund launched in North East

A £10million property fund aimed at supporting smaller scale North East construction and property development projects will provide an important boost for the construction industry.

The idea for the fund was conceived by FW Capital, the investment company based in the North of England, who will now manage the North East Property Fund. The fund is backed by Santander and the North East LEP and is held by NPF 2016 Ltd, a special purpose vehicle set up by directors Michael Smith and Geoff Hodgson for this purpose.

The North East Property Fund has been created in response to strong demand from small and medium-sized (SME) construction and property development companies who are unable to access mainstream finance from traditional sources and is hoped it will help kick start development in smaller scale property ventures across the North East.
“Santander is proud to support this new venture which will have a tangible impact on the local North East economy, including significant job creation,” said Stephen Carmichael, Relationship Director, Santander Corporate & Commercial.

 

“This is a brand new fund concept in the North East combining both public and private money to benefit SME property developers in the region. We were pleased when FW Capital approached us and the North East LEP about the fund idea. It’s a bold and compelling initiative that is confronting head-on the urgent need to deliver more new-build property.”

 

The fund will provide loans from £250,000 to £1 million for non-speculative residential and commercial developments in Tyne & Wear, Northumberland and County Durham. Typical repayment terms are between nine and 18 months.
Like other regions in the UK, smaller construction and property development companies have struggled to access finance from traditional lenders, leading to a new-build deficit in residential and commercial properties. This has in turn led to housing shortages in the area.

 

In terms of the North East itself, an estimated 6,440 homes were built last year vs an annual target of 9,000; only 1,420 of the 3,800 target for affordable homes were built in the region; this shortfall is compounding the legacy deficit year on year.

 

David Land, the North East LEP Investment Panel Chair said: “The North East Property Fund will tackle a pressing need identified in the region’s Strategic Economic Plan to build more homes which in turn will help drive economic growth.

 

“Our ambition is for the North East to return to pre-recession housing rates of more than 6,000 new houses a year and this new fund provides smaller construction firms with the confidence to pursue projects to build vital new housing.

 

“A similar fund in Wales has had a proven impact and demand to access this type of investment in our region is strong.”

 

The fund is based on the highly successful Wales Property Development Fund that has been operating for almost four years within the Finance Wales Group. FW Capital is part of the Finance Wales Group and they currently manage a number of funds in the North of England.

 

“At FW Capital we’re able to combine our existing local knowledge with shared expertise regarding property fund management in the wider Finance Wales Group,” explained Fund Manager Joanne Whitfield. “We’ve supported some excellent companies in the North East over the last seven years with a range of growth finance solutions from short-term loans to mezzanine and equity finance.

 

“We’re looking to expand our offering so that developers here in the North East will benefit from similar success we’ve seen in Wales with the Wales Property Development Fund. We pride ourselves on being a trusted finance partner of small and medium businesses across the North of England and we are delighted to be able to offer this new product to support smaller developers to grow.

 

The fund will operate on a commercial basis and by reinvesting returns into future projects it has the potential to provide over £30 million of finance into smaller developers over the next five years.

 

It aims to finance the build of over 300 new homes and finance the development of around 4000 square metres of commercial space. This is forecast to contribute in excess of £25m to the regional economy, creating or safeguarding over 600 local jobs.

 

Square One Law acted for FW Capital on setting up the Fund, Ward Hadaway acted for Santander and DWF acted for the North East LEP. PwC and UNW provided financial due diligence services to Santander and the North East LEP.

 

The team at Square One Law has been involved in the creation of over 25 funds . Mark Lazenby, Partner and Head of Finance, said: “The creation of a property fund for the North East is great news. This is the first time a fund like this has been set up in England and it will build on the great work FW Capital has done with the Wales Property Development Fund as well as assisting the North East LEP to deliver its Strategic Economic Plan.

“The use of innovative funding structures like this to help recycle public monies and create public/private partnerships

will be a good way to help sustain economic growth in the North East.”

 

Businesses wishing to apply for investment from the fund should contact Tony Cullen at FW Capital on 0191 269 6966, email Tony at [email protected] or visit http://www.fwcapital.co.ukfor more information.

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North East LEP seeking Government assurances on EU structural funding

The North East Local Enterprise Partnership (LEP) is seeking reassurance that European (EU) funded projects already signed off by Government will continue to be delivered.

To date, the North East LEP area has £89.5million of its £437million EU structural funding committed to projects for the 2014-2020 period.

A further £104.5million worth of projects were put forward to Government for approval in advance of the Referendum.

Collectively these projects will support over 7,400 businesses across the North East LEP area, which covers Durham, Northumberland and Tyne and Wear, driving growth and job creation.

The funding will also support almost 30,000 local people into employment and provide those in employment with the skills they need to progress in work.

Chair of the North East LEP Andrew Hodgson said: “We are hopeful that these projects will be honoured by Government and deliver important support to businesses and local people before Brexit happens.

“It is important to realise we will not be immediately losing the opportunities that EU funding has historically brought to the North East.

“Millions of pounds of projects are still likely to go ahead, bringing new jobs and closing the skills gap in the North East. The truth is that we just don’t know yet if or when we will see changes.

“EU funding has hugely benefitted the North East over the last few decades and we are lobbying Government for clarity and seeking assurances that any potential future funding gap will be filled. We urge the Government to provide this guidance quickly to ensure opportunities to create jobs and growth are not lost.”

There is no formal Government guidance available currently following the EU Referendum result on the amount of European funding that will be available in the future for North East businesses and organisations beyond the projects already approved.

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FinanceCamp North East pitches as the future of investment for regional businesses

FinanceCamp North East is being pitched as the smart new way for regional businesses to secure the right kind of investment to fit their plans for growth.

Details have now been released for this new programme of support which will culminate in a major event on 21 June 2016 at Ramside Hall, Durham, where businesses with bright ideas will meet lenders who want to lend and investors who want to invest.

Enterprises of all sizes, structures and sectors are now being urged to apply for the programme to explore different ways to finance their ambitions – whether that’s through a start-up loan, a multi-million pound equity deal or anything in between.

FinanceCamp has been shaped by input and ideas from a wide cross section of businesses, government bodies, research and educational institutions, business representation groups and support organisations who have an interest in accelerating innovation in the region.

It’s been developed by the team behind the region’s annual innovation conference Venturefest North East, with backing from the North East LEP, North East Finance, the North East BIC and Innovate UK.

Simon Green, Executive Director at Venturefest North East, said: “Venturefest’s investor introductions have helped secure hundreds of thousands of pounds in finance for businesses across the North East over the past few years and FinanceCamp builds on this success story.

“Businesses told us that they needed more opportunities to explore their finance options throughout the year and we have responded with this exciting new programme designed to save time and simplify the investment process.”

Hans Möller, Innovation Director at the North East LEP, said: “We know SMEs have struggled to secure finance in recent years and as such wholeheartedly support initiatives like FinanceCamp North East and our own North East Investment Fund, which provide businesses with the capital they need to grow and create new jobs.

“The Venturefest North East team has done a fantastic job getting this new scheme off the ground.”

Support provided to businesses taking part in FinanceCamp will be tailored to their needs, stage of growth and structure.

Expert advisers will work with each participant to explain all of the finance routes open to them, weigh up what fits their plans best and prepare their proposition to make it as attractive as possible to investors. Once they are fully prepared, businesses will then be introduced to a range of potential funders.

This initiative is part of a wider programme being developed with around 50 partner organisations to support innovation in the North East. Led by the Venturefest North East team, the programme is supported by Innovate UK and the North East LEP and North East BIC, with part-funding from the European Regional Development Fund.

For more information and to apply for FinanceCamp North East visit financecamp.co.uk

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Women and Innovation – what’s going wrong?

On International Women’s Day, 8th March 2016, HSBC announced the shortlist in their recent business competition. Of the ten people short-listed, there was just one woman- and that’s out of over 1000 applicants to the competition.

This could have been a one-off, but similarly, last summer, in the Virgin Pitch to Rich competition which attracted multiples of 1000s of entries, yet again, the shortlist of ten was nine men and one woman (http://www.virginmediabusiness.co.uk/pitch-to-rich/). What is going wrong here? Why is it that business ideas presented by women are not chosen as winners? I can’t believe that the quality of the applications from women to both competitions was so much lower that it caused them to be so under- represented in the short-lists. I’ve used these business competition examples as a proxy for women’s engagement in innovation, which is perhaps misplaced, but having searched my networks (which are mainly North East England based) and tried to uncover women who are innovating, it is clear that there are women in senior positions in supportive /facilitative roles in innovation environments, but it’s hard to find women who are openly ‘innovating in business’.

At this point I should declare my interest; one is that as a former secondee to the North East Local Enterprise Partnership Innovation team, but secondly, (and my major prompt for this article), is I am particularly irked as I entered my invention to both competitions. Now naturally I feel my innovative business deserves to be up there in the top ten(!) (in a nutshell, I’ve designed a new baby’s cotbed, (see http://www.karekot.com/) which systematically reduces the hazards I faced with my baby in a traditional wooden-barred cot). I’ve followed all the due process rules of product development, including spending thousands on intellectual property, but for whatever reason I have not yet managed to get it ‘over the line’ and get it to market. Karekot was inspired by my daughter when she was a baby- she’s now six and a half and it’s getting embarrassing that it has taken me so long! There are mitigating circumstances however, and rather than brooding on my own bitterness, which I admit I’m good at (!), I’ve tried to understand why it is that women are so under-represented in innovation:

The investment network is imbalanced

I’ll start off by saying it’s great that we have a female investor network here in North East England http://www.gabriel-investors.com/, but most of the investment opportunities still require pitching to a majority of men. I have recently been recommended to approach a North East based investment network and did some research on their members – all 16 of them listed are men! Whilst I have no fear of pitching to this audience, and have done it with some success in the past, for some women with great ideas and creativity, this can really be off-putting. From the investor perspective, (and indeed in any grouping of similar types of people), they will naturally associate with those who are like them. But, wouldn’t it be great if there could be a more diverse mix on our investment panels resulting in a more diverse mix of businesses funded? It’s interesting (and quite sad really) to note that an investment platform called CircleUp uses data to select potential investment businesses, rather than a human, to avoid bias see http://www.fastcompany.com/3057844/when-data-not-humans-guide-vc-funding-more-women-win but it is with some success, as 35% of its funded companies have a female Chief Exec or Founder compared to the usual rate of traditional VC investments being less than 10%. And there are examples of where investments in female led businesses pay off; First Round Capital reported female founders performing 63 % better than investments made with all-male founding teams (http://thenextweb.com/insider/2016/03/11/961528/). Village Capital (http://impactalpha.com/social-enterprise-leveling-the-investment-playing-field/) found that female-run companies outperformed male-led firms by at least 20 percent in revenue earned and jobs created while raising less capital. Now these examples are from the USA- what might we do here?

Women present their ideas/opportunities differently and with less confidence

I’ve noticed that women are much more humble, to the point that they are apologetic about their idea/invention when presenting. It seems to be a natural default position to accept any criticism, implied or otherwise, rather than legitimately challenge it. This is about belief and confidence I guess. Avril MacDonald wrote a fabulous report about the different approaches boys and girls take in the Science, Technology, Engineering and Maths (STEM) environment (https://www.wisecampaign.org.uk/uploads/wise/files/not_for_people_like_me.pdf) and has done some very interesting work on the different approaches that men and women adopt when applying for jobs: When it comes to for example, the ten essential criteria that the job requires, potential female and male applicants might have just seven essential skills, but at this point the female will reject it out of hand as she does not have the full set of essential skills, whereas a male will just go for it anyway and probably get the job– well good on him! In my recent experience I was speaking to an excellent financial advisor about what would be reasonable to pitch for as a salary for me to potential investors; my default position was around minimum wage, his advice was to almost double it as in the past investors had not baulked at the Chief Executive taking a reasonable, but not exorbitant salary!

Innovation is perceived as “techy” but truly great innovation sees unarticulated needs and women are often better at identifying these as product or service opportunities

Innovation is ‘sciency and techy’ ?– No its not, it certainly can be, but innovation can apply to every aspect of our lives. However, looking at the on-going imbalance of women who study and work in the STEM industries and the perception that innovation predominates in these industries, this might again partially explain why there is an under-representation of women in innovation in the workplace. An article published on International Women’s Day : http://www.information-age.com/industry/uk-industry/123461066/international-womens-day-2016-10-things-you-need-know-about-women-tech#sthash.Z5BDLfkL.dpuf cited just 7% of girls currently taking up computer studies A-level courses. At University only 17% of those studying computer science in higher education are women, which is the lowest percentage in any field except for engineering and technology. In these subjects women make up just 15% of the enrolments. Of that small percentage of women who take STEM subjects, only half (51%) actually go on to do STEM-related jobs. But, women are good at seeing problems and creating solutions to them. The nursery industry is a really good example of where mums especially come up with new products because what they have experienced simply didn’t work well enough.

Women still remain the main carers

‘Mummy, you’re always working!’ – how can that plaintive wail from a cute as chips six year old not tug at your heart strings and not take you away from that important aspect of your business plan? I regularly get this and I constantly feel the guilt as I juggle to keep her sweet, the house in a state of reasonable tidiness and progress my business, in effect, in my spare time. And school run and school pick up always mean that I’m one of the last in work and one of the first to leave so, those breakfast meetings and dinners in swanky (and not so swanky hotels!) are off the agenda. This is, I know, where many informal, but productive conversations are had.

And finally, the pearler!:

‘It’s a lifestyle business’

WHAT??? When recently speaking to a potential investor about my business, this is the comment I received from him. Why is there an assumption that because you are female you naturally fall into the ‘lifestyle business’ category? – the conversation ended pretty soon after that!

So, that could appear to be quite a subjective rant, and whilst I know a lot of men want to see change I do feel a little better for it! If this article provokes responses of women (and men!) who can challenge my assumptions and relay different experiences great – but even better if they are actually doing it, let’s shout about it and get it out there!

Katharine Paterson
Founder and Director at So To Company Ltd