The Role of Regional Funds

Paul Heaven, Managing Director, Blue Sky Corporate Finance explains the role of regional funds and their economic importance:

photo of paul 2The poor unfortunate SME owner/manager must view the finance market with utter bewilderment. As well as the mainstream banks there are asset backed financiers, equity funds, revolving finance specialists, crowd funders, peer-to-peer lenders and a whole host of specialist fund managers.

Adding apparent complexity to this landscape are a whole parapet of regional funds with strange geographic investment limitations, sector preferences, upper and lower investment limits and in many cases they are looking for investment opportunities with characteristics that are not exclusively focused on financial returns. Many of these regional funds are quite small, managed by fund managers that may not be household names and they may appear to be quite hard to find.

So why do they exist, why are they needed and what do they do?

Regional economic characteristics, needs, strengths and aspirations differ. The West Midlands has a relatively poorly educated youth population and a hard core manufacturing base, Cambridge suffers from poor transport links but enjoys a thriving biotech sector, Cornwall has an ageing population and high unemployment but enjoys natural wave and wind energy assets.

These local factors give rise to unique challenges and needs and the regional Government agencies (Local Authorities, Local Enterprise Partnerships, Combined Authorities and the like) that are charged with the task of reviving the economic fortunes of their area have a duty to try to address those challenges.

To deliver on their business plans the West Midlands needs funding for advanced manufacturing and tooling, Cambridge needs equity funding for tech ventures and Cornwall needs renewable energy capital.

Blue Sky has recently completed projects for local stakeholders in the West Midlands, East/South East Midlands, Yorkshire/Humber, Cheshire and Cornwall/Isles of Scilly. All of these projects involved the engagement with local experts, businesses and other stakeholders on the design, development and deployment of regional funds designed to meet specific local economic challenges.

All of these regional funds are designed to take advantage of local economic characteristics, strengths, aspirations and needs. They are all intended to make sure that funds are available to encourage investment in sectors and areas that local experts have prioritised.

Regional Funds may add to the complexity of the finance landscape but they are a key component of regional economic policy and perform a critical role in localism.