Mayor of London to invest more than £100m in small businesses
Sadiq launches largest ever fund for small and medium enterprises
Fund includes £14m to support transition to circular economy
Small businesses are set to benefit from more than £100 million in investment from the Mayor of London, Sadiq Khan, as he launches the largest fund of its kind ever created by City Hall.
The Greater London Investment Fund has been developed specifically to target businesses which have had difficulties in securing crucial investment. As well as investing in 170 companies, the fund will secure at least another £103 million in private sector investment and create 3,500 new jobs in the capital.
While London has a world-leading financial ecosystem, some small and medium-sized enterprises (SMEs) struggle to access the funding they need to grow as lenders often tend to focus on larger companies with a more established credit history, for example.
The bulk of the money for the new fund comes from European Union sources, which the Government is yet to give any assurances about replacing post-Brexit: £35 million from the European Regional Development Fund (ERDF) programme, overseen by City Hall and the London Economic Action Partnership (LEAP); and £50 million is from the European Investment Bank (EIB).
The fund will also focus on industries identified as important for the capital’s economy by the Mayor in his Economic Development Strategy. These include cultural and creative industries, financial and business services, life sciences, low carbon and environmental goods and services, tech and digital, and tourism.
One of the Mayor’s environmental priorities is helping London make the transition to the circular economy, in which Londoners and businesses keep resources in use for longer. As such, £14 million of the total fund has been ring-fenced for businesses which support this goal, of which £7 million has been invested by the London Waste and Recycling Board (LWARB), the partnership between the Mayor of London and London’s councils.
Small businesses can now apply by contacting either of the independent fund managers – MMC Ventures and The FSE Group – directly.
The Mayor of London, Sadiq Khan, said: “Small businesses are the lifeblood of our economy – they account for more than 99 per cent of all businesses in the capital and support more than half of all jobs.
“London is the best place in the world to start and grow a business – but even in such a dynamic economy as ours, some small entrepreneurs can’t access crucial funding.
“I promised to be the most pro-business Mayor that London has ever had and that’s why we’re allocating a record amount to SMEs who can create jobs and play a crucial role in our economy.
“I’m also committed to ensuring all Londoners can thrive, which is why we have policies in place to ensure this fund supports women-led businesses and entrepreneurs from black, Asian and minority ethnic backgrounds.”
CEO of Funding London, Maggie Rodriguez-Piza, said: “The launch of our pioneering GLIF is a brilliant example of how the public and private sector can work together to support London's economy.
“The fund aims to lead the way in supporting London's SMEs and maintaining the capital’s position as the ultimate place to build and grow companies. We look forward to working with our fund managers, MMC Ventures and FSE Fund Managers, to achieve this vision.”
Chair of the London Waste and Recycling Board, Dr Liz Goodwin OBE, said: “Targeted finance like this can play a vital role in helping overcome barriers to growing a circular economy in London, which could bring net benefits of at least £7 billion every year to the capital.
“Our contribution to this innovative fund is the final piece of the investment jigsaw for LWARB, as we support startups, SMEs and mature businesses all wanting to make the very best use of increasingly limited materials and resources.”
Notes to editors
- The funding will come from a number of sources:
- £35 million of European Regional Development Fund;
- £50 million from the European Investment Bank;
- £7 million from the London Waste and Recycling Board (LWARB); and
- £11 million in returns from previous investments made through Funding London (on behalf of the Mayor).
- The fund will be administered by fund managers MMC Venture Limited and The FSE Group and allocated through three sub-funds:
- Venture Fund: £45 million (investment from £100,000 to £2 million) (MMC Ventures Limited)
- Small loans: £27.5 million (£100,000 to £500,000) (The FSE Group)
- Large loans: £27.5 million (£500,000 to £1 million) (The FSE Group)
- To apply to the fund, SMEs should contact the fund managers directly:
Funding London was established in 2004 to provide venture capital and loans to SMEs which has previously found it difficult to secure such funding, on behalf of the Mayor. So far, the organisation has invested more than £51 million invested into 607 SMEs, secured £286 million in outside investment for small businesses, and created or safeguarded more than 4,300 jobs.
European Regional Development Fund
The GLIF will receive up to £35 million from the England European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020. In London, the Greater London Authority is the Intermediate Body responsible for European Regional Development Fund. Established by the European Union, the European Regional Development Fund helps local areas stimulate their economic development by investing in projects which will support innovation, businesses, create jobs and local community regeneration.
European Investment Bank
The European Investment Bank (EIB) is the lending arm of the European Union and the world’s largest multilateral lender. The GLIF will receive £50 million from the EIB.