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Capital injection as Invest NI creates two venture funds

Invest NI has established two new venture capital funds to stimulate private-sector growth.

The Co-investment Fund will target investments of £250,000 to £450,000, while the Development Fund will focus on investments of between £450,000 and £2m. The new funds are additional to the Spin Out Fund, which specialises in investments of between £50,000 and £250,000.

As part of Invest NI’s wider Access to Capital strategy, the new schemes will operate within a Fund of Funds, managed with the objective of recycling investment returns into new investments and with flexibility between different elements. It is intended that they will open doors to additional funding from other sources. Initially the investments will be made as equity, but will eventually be supplemented by loans funds.

Enterprise Minister Arlene Foster said: “Many of our young innovative companies with high-growth potential have historically experienced difficulty securing funding from other sources because, while they may potentially offer high rewards, they are viewed as high risk. The introduction of new potential funding sources, which will be a combination of public and private-sector monies, will fill a gap in the local venture capital market and ensure that early stage companies do not suffer from lack of investment.

“Encouraging and supporting the growth of our private sector is a key aim of the programme for Government. Our entrepreneurs need to be supported to grow their innovative companies to scale and compete successfully in global markets. The establishment of this substantial pool of funding will give them access to the capital required to do so.”

Invest NI is tendering to appoint managers to run the £30m development fund and £16m co-investment fund.

Ms Foster also announced a change in approach by Invest NI in the way it supports small firms.

Invest NI is, said DETI, to move from “an exclusive client-centric approach to a partnership working with all businesses in Northern Ireland to achieve export-focused growth”. Partners in this delivery model will include district councils, other government departments and external providers of support.