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Launch of new Business Growth Fund
25 May 2011
Last Thursday (19 May) saw the official launch of the Business Growth Fund (BGF); a new ‘Business Angel’ body governed and backed by representatives of five of the largest banks in the UK and other independent non-executive directors.
The BGF has been operational since April 2011; its mission – to provide long-term growth capital to UK businesses with a turnover of £10million or more. The BGF, like any other business angel, operates by injecting capital into your business in return for a shareholding and a seat on the board of directors. The difference BGF proffers is that its governing model is borne out of a Business Finance Taskforce set up in July 2010 by chief executives of the largest UK banks and the British Banker’s Association, which has, together with the UK Government, committed £2.5billion to kick-start investments by BGF.
What does it mean for businesses?
BGF has offices throughout the UK and is looking to provide 5-7 year term funding of £2million-£10million in return for equity and a place on the management board of established UK businesses with turnovers of between £10million and £100million per annum.
What are the beneifts?
The Benefits: We are yet to see detailed terms of BGF’s investment conditions, whether these are comparable to other established investment houses or even traditional bank funding is yet to be seen, but at the same time, owner-managers need to consider whether they are prepared to give up a percentage of equity and control in their businesses in return for long-term capital investment.