47/02
14 May 2002
MORE BUSINESSES, NOT BENEFIT OFFICES, FOR DEPRIVED AREAS
New £40 million investment funds to boost enterprise in disadvantaged communities by increasing access to finance for local entrepreneurs opened for business today.
The Bridges Community Development Venture Funds, supported by £20m of Government money and £20m from private investors, will only invest in businesses that will regenerate local economies in the most deprived areas of England. The Funds are launched today as new figures from the British Venture Capital Association show a record rise by 24% of investment in UK start-up companies.
Speaking at a breakfast event for investors co-hosted in Downing Street by Trade and Industry Secretary Patricia Hewitt, Chancellor Gordon Brown said:
?Britain needs an economy that must work not just for some people some of the time, but for all of the people all of the time; too many people are left out of the British success. Even at a time of record investment in start-up businesses by venture capital, we can and must do better.
?The key to neighbourhood renewal is not more benefit offices but more businesses, which is why these new Funds are crucial to opening up opportunities and encouraging and rewarding enterprise. They will help dynamic and fast-growing enterprises to prove that deprived areas are not no-go areas for business but sources of future growth and entrepreneurship?.
Trade and Industry Secretary Patricia Hewitt said:
?It is essential that Government meet the challenge of enterprise with new incentives to reward entrepreneurship. Small businesses are the key to future growth everywhere, and nowhere more important than in high unemployment areas.
?These new funds will enable entrepreneurs in deprived areas to maximise access to all of the opportunities that the UK economy presents.?
The funds will be run as commercial operations by a newly established management team of professional venture capitalists, operating on standard venture capital principles. This means that they will look to provide capital to businesses that will be successful and grow strongly, bringing deprived areas the growth-enhancing benefits of the venture capital model.
NOTES TO EDITORS
Community Development Venture Funds were one of the main recommendations to come out of the Social Investment Task Force report in November 2000. The Task Force, chaired by Sir Ronald Cohen and comprising leading entrepreneurs, venture capitalists and charities, made a number of recommendations designed to boost enterprise in disadvantaged communities by increasing access to finance.
The other key recommendation from the Task Force, the Community Investment Tax Credit, is being legislated for in the upcoming Finance Bill. This initiative, complimentary to the Venture Funds, is also aimed at bringing more private capital to deprived areas, and achieves this through intermediary community development finance institutions.
To qualify for community venture funding, entrepreneurs will need to be located in the most deprived 25% of wards in England, and have a strong employment, supplier or market relationship with the area. For further information on the Funds, contact Bridges Community Ventures Ltd, Philip Newborough or Michelle Giddens on 020 7872 6453, or Apax Partners, Siobhan Loftus on 7 872 6495. More details on the qualifying criteria and how to apply for an investment can be found on Bridges Ventures site.
Figures published by the British Venture Capital Association (BVCA) show that the highest ever number of UK start-up companies were invested in, with a record number of companies received private equity. The figures can be found in the BVCA Report on Investment Activity 2001.