Exclusive: Government considering South West regional investment fund

Plans for a regional investment fund for the South West are being considered by the Treasury and could be announced in the autumn budget on October 27th.

The proposed fund would resemble the structure of the £500m Northern Powerhouse Investment Fund (NPIF), although will not initially have anything like that much funding at its disposal, according to sources with knowledge of the plans.

Like the NPIF and other regional funds such as the Midlands Engine Investment Fund and the Cornwall & Isles of Scilly Investment Fund, the proposed South West version would be run by the state-owned British Business Bank in collaboration with local partners, the sources said.

Although the plans are said to be well advanced, there is no guarantee they will be announced next week. One source said the decision was still subject to “political wrangling” and could be delayed, or even abandoned. A different source put the chances of the chancellor, Rishi Sunak, making the announcement at 50/50.

When contacted by South West Tech Daily, the British Business Bank declined to comment. The Treasury did not respond to a request for comment.

If it is announced, the launch of an investment fund would be a boost for the South West, which struggles to attract funding for its businesses. Of the total number of private equity and venture capital deals signed off in the past year, barely 5% were made in the South West, according to the British Business Bank’s Equity Tracker 2021 report. London and the South East accounted for nearly 70%.

The government has pledged to improve regional economies across the country through its levelling up agenda. However, many of the policies announced so far have been focused on the Midlands and North of England, leading to criticism that the South West is missing out.  

The NPIF was launched in 2017 and offers microfinance, debt and equity to small businesses. Last year, the chancellor awarded an extra £100m for investment through the fund, taking the total to more than £500m. The Midlands Engine Investment Fund is has £250m to invest, while the Cornwall & Isles Scilly Fund was worth £40m when it was launched in 2018.

Ben Cooper, Funding & Investment Lead at Tech South West, said: “This is very exciting news.  We have been talking about the need for a sizeable regional investment fund for some time, and so it’s great to see the government are considering that option for the South West.  Hopefully some of that funding will be directed at the start-up end of the market, which research by Tech South West has shown to be a real gap.  

We work closely with BBB and they are a key contributor to our new cross-region Funding Advisory Board.  Their own recent funding research shows the struggles firms in the South West have in sourcing investment locally - despite the amazing efforts of Angel groups like Bristol Private Equity Club and Michelmore’s MAINstream, and fund managers like Newable and Science Creates.

"Fingers crossed we get this confirmed in the Autumn Statement.”