Investment will aid young companies

8:45am Friday 10th October 2008

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SMALL and medium-sized businesses (SMEs) in the North-East could benefit from a £125m support package if negotiations by the regional development agency One NorthEast are successful.

A team of financial experts from the agency and North East Finance, formerly NStar, are drawing up a proposal for Joint European Resources for Micro to Medium Enterprises (Jeremie) that, if accepted, could lead to a fund for small and early stage companies looking for investment.

The part-private/part-public sector money would come from the European Regional Development Fund (ERDF) and One NorthEast’s single programme funding, with possible private finance from the European Investment Bank.

The team of financial experts will spend the next 15 months preparing the case for the Jeremie project, and hope to be able to make an announcement by the end of next year.

Malcolm Page, One NorthEast deputy chief executive said: “Jeremie could enable us to create a holding fund with a large proportion of ERDF funding, hopefully matched with private sector investment finance from the European Investment Bank and Single Programme funding. It has the potential to bring in £125m over the next five years.

“Jeremie is an exciting project but there is still a huge amount of collaborative work to complete with the Government, the European Commission and European Investment Bank over the next couple of years to bring it to fruition.

“These resources will help us to create a significant long-term legacy, so in ten years time we will hopefully have investment funds available for regional SMEs to continue the good work, after the current European structural programmes have come to an end.”

Andrew Sugden, director of membership and policy for the North- East Chamber of Commerce, said: “It is great to hear that plans are in development to improve access to finance for companies in the North- East. Securing investment finance is crucial for companies with growth ambitions and is likely to be a significant hurdle in the current economic climate.

“This type of innovative use of UK public, private and European funds could be welcome boost to the North-East economy.”

Colin Stratton, North-East regional chairman of the Federation of Small Businesses, said: “The FSB welcomes discussions regarding a holding fund of £125m available to SMEs within the North-East region.

“The FSB is keen to meet One NorthEast to discuss its implementation.

Such challenging times in the economy have demanded a bold response and the FSB is looking forward to receiving more details about the scheme.

“The North East is a vibrant place full of successful entrepreneurs and small businesses. Such funding can only enhance the region and ensure future economic growth.”

North East Finance, works with the public and private sector to establish venture capital funds for SMEs in high growth sectors in the region.

Its previous successes include the £23m North-East Co-Investment Fund and the £10m North-East Proof Of Concept Fund.