A European cash pot designed to help North East business grow has passed a key milestone after sparking £100m of investment into local firms.
Since launching in May 2018 the North East Fund – which was created with support from the European Regional Development Fund – has provided over £42m to firms in the region, helping to leverage a further £58m from other investors.
The landmark total comes a few months after the fund revealed it had also helped a raft of companies to secure £10m of funding since the start of the lockdown period.
The North East Fund is a suite of five venture capital and loan funds, launched two years ago to invest £120m in around 600 North East businesses over the five years to March 2023, with a view to creating over 2,500 new jobs.
The fund managers provide business development advice and investment finance to small and medium sized enterprises based in the seven Local Authority areas of the North East.
A recent six-figure investment in Consett-based Redemption Food Company took the North East Fund over the 250-company milestone.
The small-batch food manufacturer supplies wholesalers to commercial catering and restaurant businesses which stopped trading during lockdown, so its operations were massively disrupted.
The loan, from the NEL Growth Capital Fund, has helped Redemption Food to manage its cash flow and retain most of its staff as it returns to more normal trading conditions.
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Jason Hobbs, chief executive of the North East Fund, said: “It’s great that we’ve been able to help so many local companies. With the disruption caused by Brexit and Covid-19, it has been a difficult environment for business and so we’re pleased to have been a source of support.
“Our fund managers provide advice and funding and have also introduced companies to some of the other national and international investors which have more than doubled the value of our own investments, making a £100m impact on the region in the past two and a half years.
“The North East Fund was established with the support of the European Regional Development Fund (ERDF) with a remit to help stimulate business growth. That continues to be our aim but we and the ERDF recognise that the impact of Covid-19 means that helping viable businesses to survive is now every bit as important as promoting growth.
“As such, our funds can now provide loans or equity investment to support working capital requirements and may also consider investing in companies operating in retail, hospitality and leisure sectors which were not previously eligible under ERDF rules.”
The North East Fund is available to SMEs across Northumberland, Tyne & Wear and County Durham, providing loans or equity investment from £10,000 up to £1m and more.
It is hoped that it will invest another £78m in around 350 companies over the next few years.