The Department of Trade and Industry (DTI) has announced details of a £40m venture capital fund that will provide funding to entrepreneurs in some of England’s most deprived regions.
The Bridges Community Development Venture Funds sees private equity firms including Apax Partners, Doughty Hanson and 3i team up with the DTI to provide equity investments of at least £100,000 to SMEs in the most deprived 25 per cent of areas in England. The £40m funding will be provided via a £20m injection from the UK government, which will be matched by private equity investors. First closing of £32.5m has been announced this week, with final closing expected towards the end of this year.
Apax chairman Ronald Cohen will be the chairman of the fund’s management company, Bridges Community Ventures Ltd. He thinks that the funds will be vital in turning around the poorest areas of England, whilst offering an important service to entrepreneurs. “We will provide significant capital and expertise to individuals who would not normally be eligible for traditional financing but whose businesses could make a long term economic contribution to their community.”
Chancellor of the Exchequer Gordon Brown said the fund will help fast-growing enterprises to prove that deprived areas can be “sources of future growth and entrepreneurship.”
Other investors in the fund include HSBC, Lloyds TSB Scotland, RBoS, Merrill Lynch, Lehman Brothers, the West Midlands Pension fund and several entrepreneurs including Mike Lynch, chief executive of UK software maker Autonomy. The executive directors of Bridges are Philip Newborough and Michele Giddens. New Look founder Tom Singh will become a non-executive director.
The Social Investment Task Force, chaired by Ronald Cohen, recommended the creation of Community Development Venture Funds as part of its report presented to Gordon Brown in October 2000.