The Newcastle-born head of the British Business Bank (BBB) hopes a new fund will help fast-growing firms in the North East.
Louis Taylor, who grew up in Gosforth and went to Newcastle’s Royal Grammar School, last year took over as CEO of the bank, the Sheffield-based agency that aims to make it easier for small and medium-sized companies to access finance to help them start up or grow. And speaking on The Northern Agenda Podcast, Mr Taylor set out how a new £660m investment fund would help address the North’s relative lack of equity finance.
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The Northern Powerhouse Investment Fund II will offer a range of commercial finance options with loans from £25,000 to £2m and equity investment up to £5m. Unlike its predecessor – which invested more than £400m in 2,000 Northern firms and brought in £615m in extra private sector funding – it will cover the entire North, including the North East.
Describing who could bid for the loans, Mr Taylor said: “It could be a company that needs equity, growth money. But it could equally be a corner shop that wants to open a second branch, or it could be a business that needs more working capital in order to grow, but its technology is already proven.
“And I think it’s important that that money does go to a range of businesses, we’re not looking to put all of the money into the middle of Manchester, or the middle of Liverpool, or the middle of Newcastle, the money should go to genuinely regional businesses in all different sort of states of progress, and managed by local fund managers.”
The BBB’s core programmes support over £12.2bn of finance to more than 96,000 smaller businesses. It is responsible for the Government’s three Coronavirus loan schemes and its Future Fund, the latter set up to support start-up firms that would usually depend on support from private investors.
The BBB provided loans of between £125,000 and £5m, but the bank’s own figures reveal a big geographical split in where the equity finance went, something first reported by The Journal in 2021. Of the 591 firms in which the Future Fund held an equity interest as of this June, only 17 of those were in the North East but 295 in London.
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Asked about the apparent dominance of firms from the capital, Mr Taylor said “time will tell in terms of the companies that actually end up converting their loan into actual equity”.
He said: “I don’t think there was any skewing of the criteria towards the London companies versus the North East companies versus companies from anywhere else. This was an open scheme. And the companies that applied came from where they came from, really.”
Mr Taylor left the North East aged 19 to go to university in Cambridge but has served as chair of governors of Newcastle’s Royal Grammar School. Prior to joining the BBB he was chief executive of 海角视频 Export Finance, the country’s export credit agency, and has also held a role as a director general in the Department for International Trade.
The North East recently saw encouraging economic news as its employment rate soared, but the region is alone in seeing child poverty rates rise in recent years. Mr Taylor said he believed business performance in the North East “is better than it’s made out, although it could be so much better”.
He said: “What we have in the North East are some really great universities that are putting out really great research, a lot of which was commercialisable. Then we’ve also got a lot of companies that have been focused historically on offshore oil and gas, but with an engineering capability that is very adaptable to renewable energy sources as well.
“So I think that if we can bring enough capital to bear around these opportunities, bring in some entrepreneurs who are experienced in accelerating the growth of a company from a product to a commercialised product.”