Bridges Venture Funding

Page last updated 14/05/02

First UK community development venture funding - £40 million for entrepreneurs
- Bridges Community Ventures Press Release www.bridgesventures.com

14 May 2002 - London – The Bridges Community Development Venture Funds, £40 million of funding which will provide capital and apply the principles and expertise of leading venture capitalists to entrepreneurs in some of England's most economically deprived areas, was launched today.

The Chancellor of the Exchequer Gordon Brown said, “Britain needs an economy that must work not just for some people some of the time, but for all of the people all of the time; too many people are left out of the British success. Even at a time of record investment in start-up businesses by venture capital, we can and must do better.

The key to neighbourhood renewal is not more benefit offices but more businesses, which is why these new Funds are crucial to opening up opportunities and encouraging and rewarding enterprise. It will help dynamic and fast-growing enterprises to prove that deprived areas are not no-go areas for business but sources of future growth and entrepreneurship.”

Trade and Industry Secretary Patricia Hewitt said, “It is essential that Government meet the challenge of enterprise with new incentives to reward entrepreneurship. Small businesses are the key to future growth everywhere, and nowhere more important than in high unemployment areas. These new funds will enable entrepreneurs in deprived areas to maximise access to all of the opportunities that the UK economy presents.”

Sir Ronald Cohen, Chairman of Apax Partners and Chairman of the funds’ management company, Bridges Community Ventures Ltd, said, "as the economic life of an area deteriorates, its communities become increasingly dependent upon welfare. With these funds we hope to begin a gradual process of reversal by supporting the entrepreneurs that exist in these areas - providing significant capital and expertise to individuals who would not normally be eligible for traditional financing but whose businesses could make a long term economic contribution to their community. This is a grass roots approach - we do not expect it to be easy or quick, but over time we do expect it to be very successful."

The Funds will be £40 million, with £20 million of investment from the private sector and £20 million in matching funding from the UK Government. Investors in the funds include Sir Ronald Cohen of Apax Partners; private equity firms 3i and Doughty Hanson & Co.; banks including HSBC, Lloyds TSB Scotland, Royal Bank of Scotland, Schroder Salomon Smith Barney, a member of Citigroup, Merrill Lynch and Lehman Brothers; the West Midlands Pension Fund; and Reuters. Several successful entrepreneurs including Dr. Mike Lynch, Chief Executive of Autonomy, are also planning to invest. SJ Berwin, a firm with extensive expertise in the Venture Capital sector, has acted pro bono on this matter.

Tom Singh, founder of the New Look retail chain and a non-executive director of Bridges Community Ventures Ltd, said, “this initiative will become sustainable and gather significant momentum if we achieve two things. Firstly, a decent return to our investors so that we, and others, can look at raising further and bigger funds. Secondly, we must create role models in these areas for the next generation. Entrepreneurs are a special type of person. They exist everywhere and often are already succeeding against the odds with limited access to expansion capital or powerful business networks. Given guidance, capital and opportunity, these entrepreneurs will deliver results beyond all of our expectations."

To qualify for community venture funding, entrepreneurs will need to be located in the most deprived 25% of wards in England and have either a strong employment, supplier or market relationship with the area. The suitable businesses, which can be at any stage of development from start-up to management buy-out or turnaround, will be small and medium sized enterprises with high growth potential requiring an equity investment of greater than £100,000.

Community development venture funds were one of five important recommendations made by the Social Investment Task Force chaired by Sir Ronald Cohen in 2000. The Task Force and Bridges Community Ventures Ltd would like to thank the Chancellor of the Exchequer, The Rt Hon Gordon Brown, HM Treasury and the Department for Trade and Industry for their ongoing support.

West Midlands Pension Fund
The West Midlands Pension Fund is the Local Government Pension Scheme for the Metropolitan Authorities in the West Midlands region and is administered by Wolverhampton City Council. The fund is currently valued at £4.7bn and has over 190,000 members. It has been an active investor in Private Equity since the mid 1980’s. For more information on the west midlands pension fund please go to www.westmids-pensions.org.uk

Mr Brian Bailey, Co-ordinating Director of Finance for the pension fund said,
“The West Midlands Pension Fund has a strong commitment to socially responsible investing and we are very pleased to support this initiative which will assist growing businesses in the most deprived areas of the country, some of which are in our region. By offering not just money, but support, advice and encouragement to budding entrepreneurs we are convinced the Bridges Fund can meet out twin objectives of gaining commercially viable returns for the members of the Pension Scheme whilst meeting our commitment to socially responsible investing.”

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