Commissioned by the Department of Business Innovation and Skills
This study provided an early assessment of the economic effectiveness of four funds that the Government introduced after 2006 to address market failures in the provision of finance to SMEs: Enterprise Capital Funds, the Capital for Enterprise Fund, the Aspire Fund and the Finance South East Accelerator Fund which is part of the Early Growth Funds. These were commercially orientated venture capital funds, investing a combination of both public and private money in SMEs seeking modest amounts of equity and mezzanine finance within the generally recognised equity gap, up to £2m.
The research involved in-depth interviews with a sample of fund managers as well as interviews with 51 applicant businesses, including some that did not complete the application process successfully. Findings showed that the BIS funds are meeting the need for modest amounts of equity finance, that they have high finance and project additionality, and that they were helping businesses leverage in additional funding from other sources.