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Investing is a local business....The North East is good at it!

Jonathan Gold

13 Oct 2015

Most investors like to be able to visit the business they invest in, and they like to talk to the people running it, face to face.

There are, of course exceptions but often, if you have an investor in your business, you might want to meet them regularly too. After all, there are other benefits an investor can bring apart from money. Small and start-up businesses need people or venture capital funds who can add value and advice and who know the environment around them.

This is one reason why the north east of England suffered a huge disadvantage compared to London and the south for many years. The money was not where the businesses up here needed it, locally. The Government began to do something about this more than 20 years ago recognising that there was a national "equity gap", but also a need to stimulate and grow investment communities outside of London.

This locally-based approach to funding is what brought me up to Newcastle in 2003. Several others like me followed in the years since then and we have the seeds of a growing investment community.  This could not have been built without several hundred million pounds of EU and UK Government capital. The latest £130m of funding in the last 5 years has attracted around £150m of additional private cash into some 800 businesses, and even more jobs.

So let's shout about our success. It has been done by local Fund Managers, teams appointed in firms like mine investing in businesses like yours with local networks. If we don't shout about it, we will continue to be defined by our problems, not our achievements.

We need to defend our success and point out that we want to do it again. For once, the model here is not broken so don't try and change it. I'm referring to the JEREMIE Funds, the original £142m and the potential £130m + that is being, we hope, put in place for the north east by the Government and EU.

The Northern PowerHouse, if it is to mean anything, must facilitate local investment activity here in the North East and not just build on the Manchester-Leeds axis. True, we are a lot smaller up here in economic terms but have demonstrated we can control our own cash and investment climate.

Over the last months I have argued with a passion that the north east must reach out to the other parts of the north. We can't do things alone but equally we need to control our local investment base in order to work well across the north.

Yes, we can do more. Tech City North, the offshoot of the London and Government sponsored initiative to support the IT and tech sector, says the north is the right focus for new investment funds and the region is failing to attract the private investment it should. I disagree, but I only disagree because we need local management of funds. The North is not a uniform economy; Newcastle is not the same as Middlesbrough and Manchester is a city region almost unique in the north. I firmly believe that we need to grow more investment, but building on what we have achieved already.

For example, Rivers Capital has now invested £9.5m with an additional £8m of capital raised with investors into 66 businesses in the region. To do this we have seen over 1000 business plans and entrepreneurs and helped a significant number to other investors. We also run the £6.5m North East Micro Loan Fund and have lent to almost 500 businesses to date that would not have managed to attract a bank loan. We can do more but all this is only possible with the help of North East Finance who manage us and the other 4 fund management businesses locally.

By the time this has been published the debate may be over, for now at least, and devolution settlements put in place. Or perhaps not. Our local politicians have not kept pace with Manchester and others when it comes to putting its case to central Government.

What won't have changed is the dedication and success of my team at Rivers Capital and our other home-grown regional fund managers in NorthStar Ventures and NEL who have built the investment community so successfully with local angels and networks like Hotpsur over the last almost 6 years. I just hope James Wharton the Minister for the Northern PowerHouse and others support their own part of the north and build with us on the great investment climate we have made here.


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