Focus On: South Yorkshire Support For Start Ups and Early Stage Businesses
Published: August 2007
Because of their short track record, forecasting is invariably difficult for start-ups and early stage businesses and they often require time to consistently generate positive cashflow, so requiring financial support to become firmly established.
SYIF investment packages of funding and mentoring support are suitable for most small and medium sized manufacturing or service sector businesses; the main exceptions are retail, primary industries and some property development.
Equity packages prove to be the most appropriate form of finance giving companies additional flexibility during the critical start-up period. SYIF’s Capital and Development Fund can provide minority stakes by way of equity between £100k and £2.5m but typically restricts first round funding to £250k for an early stage business - although further funding may be available as the business grows. The Fund looks for companies with significant growth potential which have a clear USP and management team which can see them through to a successful exit in 5/6 years.
Tony Goulbourn, Chief Executive at SYIF, said: "With all of our funds we are looking at companies with significant growth potential which have a clear Unique Selling Point."
For businesses within niche technology markets, SYIF has set up a Seedcorn Fund which invests in pre-revenue, early stage technology and knowledge-based enterprises.
The Seedcorn Fund fills a significant gap in the financing market, targeting ventures which may be seen as too high-risk by mainstream investors and offering a secure future for innovation in the region.
Tony Goulbourn, continued: "With all of our funds we are looking at companies with significant growth potential which have a clear Unique Selling Point."
"Research has shown that the majority of businesses which fail, do so in the early stages of their inception and while the SYIF’s Small Business Fund team can provide early stage businesses with loans of between £15,000 and £50,000, the business needs to satisfy us that they can meet the monthly loan repayments from the outset and this will likely mean they have already built a track record and an order book to back up their projections."
"The loans are typically unsecured, but in certain circumstances the Fund will ask for a personal guarantee to provide additional comfort. There is a sliding scale of interest rates depending on the size of the loan and there are two options available to receive interest rate rebates to suit the businesses needs. Loans are repayable over one to five-year terms and with no early repayment penalties. "
Mentorbank is a facility provided by SYIF alongside investment finance to allow new companies access to professional guidance through 480 potential business mentors and non-executive directors - covering a multitude of sectors.
Mentors can be closely matched to each appointment, providing a back-up of experience and expertise, pitched to help individual businesses to flourish and avoid pitfalls.
Other start-up initiatives associated with SYIF include the regional introduction service – Business Angel Network, run by Yorkshire Association of Business Angels (YABA). This network offers a forum for smaller businesses to network with local independent financiers who may be willing to invest in entrepreneurial ventures.
Tony added: "SYIF is committed to catalysing and supporting business growth for companies who pay business rates in South Yorkshire, or who are prepared to move into the region."
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About South Yorkshire Investment Fund
South Yorkshire Investment Fund provided seedcorn, loan and equity linked investments, ranging from £15k to £2.5m, specifically to help small and medium businesses meet the gaps in funding they need for growth and development.
Created as part of the Objective 1 programme, the Fund is a private and public sector business finance provider. The European Regional Development Fund and Yorkshire Forward are investors in the Fund.
South Yorkshire Investment Fund also provided access to Business Angel investments from the Yorkshire Association of Business Angels and Microloans through BiG Business Loan Fund and Donbac Microloan Fund.
Finance Yorkshire has now taken on responsibility for providing gap finance in Yorkshire and the Humber.
For further details please contact Suzanne Tinkler, on 0845 649 0000.
South Yorkshire Investment Fund Ltd is a company limited by guarantee (Registered No 3936065). South Yorkshire Investment Fund comprises three sub funds, the South Yorkshire Investment Capital Fund, the South Yorkshire Investment Development Fund, which are each managed by YFM Venture Finance Limited, and the South Yorkshire Investment Small Business Fund, which is managed by Finance South Yorkshire Ltd. YFM Venture Finance Limited (Tel 0113 294 5000) and Finance South Yorkshire Ltd (Tel 01709 386 377) are each authorised and regulated by the Financial Services Authority. South Yorkshire Investment Fund also provides a number of services, which are not regulated by The Financial Services Authority. These include the pilot Seedcorn Fund, BiG Business Loan Fund, Mentorbank and access to the Donbac Microloan Fund. BiG Business Loan Fund is managed by Donbac Ltd (company registration No. 01925556) and Key Fund Yorkshire Ltd (Tel 0114 242 8900).