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£150m Investment Fund for Scotland preparing for summer launch

Press release 05 January 2023

British Business Bank invites proposals from potential fund managers to operate new fund.

The British Business Bank is on course to launch a £150 million investment fund this summer, aimed at driving the growth of small and medium-sized businesses in Scotland.

The Investment Fund for Scotland is one of a series of Nations and Regions Investment Funds being launched by the British Business Bank which will deliver a £1.6 billion commitment of new funding to smaller businesses across the UK. The fund will offer a range of commercial finance options with loans from £25,000 to £2 million and equity investment of up to £5 million.

By increasing the supply and diversity of early-stage finance for smaller businesses in Scotland, it aims to tackle an identified funding gap. Similar funds are planned for Wales, Northern Ireland and the South West of England, along with follow-on funds for the Midlands and the North of England.

The new funds follow the success of the regional investment funds already being delivered by the British Business Bank through the Northern Powerhouse Investment Fund (NPIF), Midlands Engine Investment Fund (MEIF), Growth Finance Fund (NI) and Cornwall and the Isles of Scilly Investment Fund (CIOSIF).

Since the existing investment funds launched, the Bank has invested over £605 million into the areas covered by NPIF, MEIF, CIOSIF, and NI, crowding in over £825 million in additional private sector co-investment and supporting over 1,650 smaller businesses.

The new Investment Fund for Scotland builds on the success of the Bank’s existing regional funds and is designed to increase the supply and diversity of finance available to smaller businesses in Scotland. Our aim is to reduce imbalances and break down barriers that small firms may face in accessing finance, creating a more level playing field. Given the geographical spread of Scotland’s smaller business population, connecting with entrepreneurs in some of the more rural and hard-to-reach areas will be an important focus of the fund. While we have seen an encouraging stream of equity deals into Scottish firms over the past couple of years, the overall levels of equity investment and also private debt lending remain much lower than Scotland’s share of the UK’s small business population. We’ll be working closely with the local small business finance ecosystem to ensure the fund provides support to innovative, ambitious business owners across the country. Ken Cooper Managing Director, Venture Solutions, British Business Bank

The Investment Fund for Scotland will operate across three tiers: smaller loans (£25k-£100k), debt (£100k-£2m) and equity (up to £5m).

Request for proposals from potential fund managers

The British Business Bank is now inviting proposals from potential fund managers to operate the new Investment Fund for Scotland via its website. It expects to appoint fund managers in Spring 2023 ahead of launching in the summer.

The British Business Bank is responsible for administering the Nations and Regions Investment Funds on behalf of the UK government. The Bank is establishing investment funds in areas not currently served by the Bank’s existing regional funding programme before launching follow-on investment funds in existing fund areas.

Notes to Editors

About the Nations and Regions Investment Funds and the Investment Fund for Scotland

The Nations and Regions Investment Funds will increase the supply and diversity of early-stage finance for UK smaller businesses, providing finance to firms that might otherwise not receive investment and help to break down barriers in access to finance.

Operating in a commercially sustainable way the Nations and Regions Investment Funds will deliver a £1.6 billion commitment of new funding through investment strategies that best meet the needs of the businesses in their nation or region.

The British Business Bank is responsible for administering the Nations and Regions Investment Funds on behalf of the UK government. We are establishing investment funds in areas not currently served by the Bank’s existing regional funding programme before launching follow-on investment funds in existing fund areas.

The £150 million Investment Fund for Scotland will offer a range of commercial finance options with small loans from £25,000 and equity investment up to £5 million. The fund will have a demonstrable presence across Scotland, linking up with the existing small business finance ecosystem to increase reach and create an impact by helping to boost productivity, innovation and jobs.

About the British Business Bank

The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to drive sustainable growth and prosperity across the UK and to enable the transition to a net zero economy, by improving access to finance for smaller businesses. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.

The British Business Bank’s core programmes support over £12.2 billion 1  of finance to more than 96,000 smaller businesses 2 .

As well as increasing the supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of finance options available to smaller businesses. The British Business Bank Finance Hub provides independent and impartial information to businesses about finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success.

The British Business Bank is also responsible for administering the government’s three Coronavirus loan schemes and its Future Fund, together responsible for delivering £80.4 billion in finance to 1.67 million businesses. These schemes are now closed to new applications.

British Business Bank plc is a public limited company registered in England and Wales, registration number 08616013, registered office at Steel City House, West Street, Sheffield, S1 2GQ. Wholly owned by HM government, the Bank and its subsidiaries are not banking institutions and do not operate as such. They are not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). A complete legal structure chart for the group can be found at the British Business Bank.

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