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Mind the gap – a résumé of Cornwall & Isles of Scilly Investment Fund one year on…

08 Nov 2019

Last week, a gathering of local professionals and business owners heard about the work of the Cornwall & Isles of Scilly Investment, as it celebrated one year of an active presence in the region.

The output has been impressive, from a standing start they were invested £2.9m in supporting 13 local businesses; attracting a further £2.2m of private sector investment.  So, in total, more than £5 million has been invested into local businesses with the support of the Cornwall & Isles of Scilly Investment Fund (CIOSIF) in its first full year of operation – as reported in the press.

CIOSIF?

Those of you who have read our blog over these 12 months and / or have attended our breakfast briefings in this period, will be aware that we have fostered a good working relationship with CIOSI. Three of my colleagues were present at the anniversary event (see further below), and at least one of our clients has been a recipient of funding from CIOSIF.

For those not familiar with CIOSIF:

  • The £40m CIOSIF was launched by the British Business Bank last year in partnership with the Cornwall and Isles of Scilly Local Enterprise Partnership (LEP), the European Regional Development Fund and UK Government to provide local businesses with more funding options to help them grow and create jobs.
  • The CIOSIF provides commercial debt and equity finance from £25,000 to £2 million to help growing small businesses across Cornwall and the Isles of Scilly. The fund is operated by appointed fund managers, the FSE Group, alongside a partnership with SWIG Finance, who support the smaller business loans element of CIOSIF.
  • CIOSIF is supported financially by the European Union, using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020.

The funding gap being filled

One of my colleagues was on the panel discussing the impact of CIOSIF during the event. One the questions posed to the panel could be paraphrased as “what funding gap is being filled by CIOSIF”.  My response to that question would have been:

  • On the debt side, whilst the rates are comparable with alternative (online) cash flow lenders the difference is, as I see it, is the ability to interact with, and form a working relationship with, CIOSIF both during the application process and after. This and the flexibility of their offering makes it more likely that decisions can be made on basis of all the information and with CIOSIF fund managers making a judgement call.  Whereas my experience of the online alternative lenders is that they are set up for speed of response (which is to be applauded) but this can make them inflexible if a borrower does not meet with their prescribed requirements e.g., no losses reported in the last 2 years.
  • On the equity side, early days here but I and my colleagues are seeing a lot more conversations about equity and these are generally involving CIOSIF. So, maybe, as opposed to being a barrier to attractiveness, the need to match CIOSIF equity is actually a stimulus to get private investors (including the crowd) to invest thus helping to fill that need for sub £500k equity deployments.  I suspect also that the owners / founders of companies are seeing the CIOSIF as more than just equity now (e.g., as a source of contacts etc. and a potential source of follow on funding) and this makes the equity proposition itself more attractive.

CIOSIF what was not said

One point that I do not think was made about CIOSIF during the event, is that they are a great source of intellectual capital in themselves – the personnel be they FSE or SWIG – are knowledgeable people who want to work with businesses to grow the local economy.  This is itself stimulating others in the region to come up with innovative ideas of leveraging off the capital (financial and intellectual) for the benefit of Cornwall & Isles of Scilly – exciting times!

PKF Francis Clark

I understand my colleagues are likely to get involved in an equity raise involving CIOSIF in the next few weeks, so I will be questioning them about that process then.

If you want to read more about the fund please visit www.ciosif.co.uk.

If you wish to chat through a potential raise involving CIOSIF before contacting the fund then please contact me in the first instance and I will put you in contact with the relevant colleague.

By Andrew James

The post Mind the gap – a résumé of Cornwall & Isles of Scilly Investment Fund one year on… appeared first on PKF Francis Clark.



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