However, because the EU budget was set in 2014 when the UK was still a member state, funds will continue to be drawn down until 2023 whether the UK exits the EU with a deal or not on March 29.
Some €113 million will be invested to increase R&D in Northern Ireland between 2020 and 2023, with the aim of doubling the number of high growth SMEs to 1,300 in 2023 and to assist 200 local companies to engage in R&D activity for the first time.
And more than €135 million will be used to increase the competitiveness of SMEs, helping them to access capital through a mix of grant and financial instruments.
Asset Based Finance
Asset-based finance allows businesses to raise finances against the value of their assets. This form of funding involves lending money to a business against their property, plant, machinery, stock, or sometimes even their brand name.
This method of finance is also debt-based but can in some cases be converted into an equity stake if a business is performing poorly. Mezzanine finance sits behind bank debt but ahead of trade equity. It generally carries a higher rate of interest.
Administered by Invest NI (see above), the SBLF is an £8 million loan fund for NI-based individuals, private companies and social enterprises in the SME and micro enterprise size range and in the start-up or growth phases of development.
- Growth Loan Fund II (ERDF)
Loans are typically between £100,000 and £500,000 over a maximum period of five years.
Eligible businesses must be in the manufacturing, engineering or tradeable services sectors with export potential.
Loans are typically between £500,000 and £2 million.
The Fund is a successor to the Growth Loan Fund set up in 2012, which committed £55 million to more than 100 businesses.
Techtart NI support includes a £17 million SME equity fund (investing between £50,000 to £1 million over a series of funding rounds), two university “spin-out” funds of £1.5 million each (investing between £50,000 and £300,000) – for tech businesses which have come out of university research – and a £3.6 million Proof of Concept Grant Fund offering “Concept” grants of up to £10,000 and a “Concept Plus” Grant (of up to £25,000).
The Co-Fund NI is a £50 million equity fund for early-stage start-ups that will co-invest alongside business angels or private investors. Investments are between £150,000 and £1 million at a ratio of 35:65. For example, if you have a £650,000 investment from a private investor, Co-Fund will match this with an additional £350,000.
Clarendon Fund Managers (CFM) manages the £17.7 million Co-Fund II on behalf of Invest NI.
In total, CFM manages £42.5m of regional venture capital funds in Northern Ireland. It has invested in over 60 companies since it began investing in 2001.
For companies who require larger sums of cash, there are the £48m Development Funds I & II. These are managed jointly by VC firms Crescent Capital and Kernel Capital. The range of each investment is typically between £450,000 and £1.2 million in any one round and can be up to £3 million over a series of rounds.
Development Funds are usually for established companies and they typically won’t invest in early-stage ventures. If you have previously raised £150-£300,000, then the Development Funds can provide follow-on funding.
Kernel is an NI-based VC whose primary focus is on leading Series A and B rounds between £500,000-£4 million for tech companies, although it does also make early-stage investments from £200,000 to £1 million. It can invest up to £10 million in a single company. Companies seeking Series A investment should either have annual revenues in excess of £1 million or be on track to achieve that within 12 months of investment.
Crescent has raised over £60 million to date from government, private and institutional investors. It invests between £450,000 and £1.2 million in equity annually, with up to £3 million invested per company over all rounds. Both majority and minority positions are considered.
To date, it has invested in 35 companies over the past 20 years.
Its investment is usually between three and seven years, with a trade sale being the most-likely exit route.
Crescent Capital III LP launched in 2013, with Invest NI committing £15 million to the fund, giving it the potential to invest over £24 million in SMEs.
MML invests anything between €2-€12 million in each business, while Dublin-based Broadlake invests between €1-10m in established companies.
This article was first published on Growthbusiness.co.uk by Tim Adler.