Enterprise Capital Fund Closes the Investment Gap

The Enterprise Capital Fund has been instrumental in bridging the investment gap for small and medium-sized enterprises.

By providing access to capital, these funds have enabled businesses to scale and grow, creating jobs and driving economic growth.

Research has shown that small businesses create 2/3 of all new jobs in the US, making the investment gap a critical issue.

With the Enterprise Capital Fund, businesses can now access the funding they need to succeed.

The Enterprise Capital Fund (ECF) is a programme designed to increase the availability of growth capital to small and medium-sized enterprises (SMEs) in the UK.

The overall aim of the ECF programme is to alleviate the equity gap that hinders enterprise and productivity growth in the UK economy.

An equity gap exists when businesses struggle to raise modest sums of equity finance, and the ECF programme aims to bridge this gap. An updated study in 2009 highlighted the structural causes of this gap.

The ECF forms part of the British Business Bank programme, which was formerly run by the Department for Business, Innovation and Skills.

The ECF programme involves a non-recourse loan made by the West Virginia Economic Development Authority to the West Virginia Enterprise Advancement Corporation, which then invests the funds in the West Virginia Enterprise Capital Fund, LLC.

Here's a brief overview of the ECF structure:

The ECF programme has specific guidelines for prospective managers, including the Application Process, Assessment Criteria, and Fund Administration & Structure information.

The Enterprise Capital Fund is designed to tackle the lack of financial backing available to fledgling businesses, with £60 million in public funding being combined with £30 million of private sector money.

Almost 80 per cent of small businesses seeking finance obtain it on their first attempt, but a small number still face difficulties, particularly companies seeking investment to grow.

The programme has a total Government commitment of over £141 million since last year, with the goal of bridging the finance gap and improving access to growth capital for small businesses.

Each of the three groups to receive Enterprise Capital Funds must raise £10 million in private funds before they begin investing in SMEs, which will be used to target high growth businesses in need of investment.

The overall aim of the ECF programme is to increase the availability of growth capital to small and medium-sized enterprises (SMEs) affected by the so-called 'equity gap', helping to alleviate what would otherwise remain a significant barrier to enterprise and to productivity growth in the UK economy.

The programme is designed to help SMEs with high growth potential to raise equity finance up to £2 million, which will be a huge boost to many small businesses struggling to get the funding they need to grow.

The Equity Gap is a significant issue in the business world, where viable investment propositions struggle to attract investment from informal investors or venture capitalists. This gap varies depending on factors like the business sector, stage of development, and location.

In the UK, the British Business Bank commissioned an evaluation of the Enterprise Capital Fund (ECF) Programme, which aimed to address this equity gap. The evaluation showed that the programme was effective in meeting its objectives.

The severity of the equity gap is not just about the amount of finance being sought, but also about the characteristics of the business seeking investment. For instance, the business sector and stage of development can be just as important as the amount of finance.

The ECF Programme has helped to increase VC investment into UK early-stage companies, strengthening the UK's VC ecosystem. This is a positive step towards bridging the equity gap.