Creative England – in partnership with Triodos Bank UK – has today launched a £24million fund to provide vital scale up finance to the UK’s most promising creative businesses.
The fund will target post revenue, IP rich SMEs, that have reached a point of scale that requires supporting finance. At present, the scale-up window for creative industry SMEs sees 72% suffering from a lack of growth capital.
The fund will be supported in part by Triodos Bank UK, the specialist ethical bank, in addition to Creative England. Launched at a time where traditional lending to SMEs has reached an all-time low, it will be deployed across the creative industries, subject to an application process underpinned by viable investment potential.
Serving as a key differentiator to traditional SME lending, in addition to individual loans deployed, Creative England will provide counsel that is aligned specifically to growth in the creative industries via a regional network of investment and sector specialists. Testament to Creative England’s active involvement in the support of investee companies in this arena, a record 83% of businesses supported by Creative England have succeeded past year 3, compared to the national average of 60%.
The landmark fund aims to unlock the latent potential of a key economic growth engine that contributes over £100billion in gross value added to the economy, employing one in 11 across the British Isles while maintaining its status as one of the most future-proof industries. Over the past seven years, Creative England has invested over £20million in the creative industries; with 81% of this investment deployed outside of London and the South-East.
This continues their previous lending activity, which is designed to support business growth and build inclusive growth by benefiting local communities and regional development. Testament to this objective, 45% of Creative England’s historical finance activity has created jobs in areas with the highest economic need. This new fund will be UK-wide and available to businesses in the devolved nations as well as England.
The structure of the fund
The fund – Creative Growth Finance - will offer one of the most competitive interest rates available on the SME lending market; each loan will be built around a repayment structure that suits the diverse nature of each beneficiary business. The fund will provide business loans of up to £500,000 to creative firms showing potential for growth and scaling, in addition to revenue and intellectual property.
Breakdown of fund structure: £10million provided by Triodos Bank UK, £5million from Creative England and £9million of funds reinvested from returns over the four years.
Creative England – investors in creative businesses
Creative England has experienced high levels of demand for finance and has a strong pipeline of investment opportunities. Since 2012, the company has made investments totalling £20 million, whilst also sustaining loan repayment rates of over 95% since 2014. The fund will serve as the first in a diverse range of investment products under the Creative Growth Finance banner, providing a comprehensive spectrum of investment facilities that will service the truly diverse requirements of businesses upholding the creative industries.
In Creative England’s previous funding, recoupment rates and business sustainability stand above the industry average, demonstrating the value of sector expertise in investment decision making. It is estimated, that with the proper funding the creative industries could - by 2023 - grow by 50% and create 600,000 new jobs.
In September 2019, Creative England and the Creative Industries Federation announced their plan to join forces and establish a new body to champion the creative sector and provide businesses with the practical support they need to thrive. By combining the Creative Industries Federation’s history bringing together UK-wide networks and as an advocate and champion for the sector with Creative England’s significant experience uncovering, investing in and growing creative businesses beyond London, the combined purpose is to make a greater difference than would be possible alone.
Caroline Norbury – CEO of Creative England discusses the sector need for this fund: “Our country’s greatest industrial asset is our people and their ideas. If we want to translate from ambition to bottom line growth, then continual investment is a must. Access to transformative risk capital to enable creative entrepreneurs to evolve from small businesses to scaleups that can add value to UK Plc, hinges on the ability to access a level of finance that is – in its current state – notoriously inaccessible. The launch of today’s fund ensures a shift in the ecosystem for lending across the creative industry. Beyond the finance itself, Creative England’s national support-network differentiates today’s launch from a traditional loan facility, into an opportunity to access expertise and counsel and connect to the relevant networks that sustain businesses at the cutting edge of their craft. The fund has been launched with creative excellence and economic prosperity at its core and is the first of many investment platforms that will continue to leverage these objectives.”
Mehjabeen Patrick – Chief Finance Officer at Creative England discusses the fund: "The prevalent issue of the UK’s scale-up gap is rife, partnered with a traditional lending structure that is hugely risk averse, imminent change is required to catalyse growth at what is a critical stage of leap-finance. The creative industries contain a myriad of viable investment opportunities, and for those with the expertise and knowledge to take advantage, we’re hugely excited to champion this much-needed initiative. Our regional focus and knowledge of the creative industries will undoubtedly allow many firms to access funding, that up until this point was unattainable or the preserve of non-creative sectors.”
Bevis Watts, CEO of Triodos Bank UK, comments on the partnership with Creative England: “As a bank that focuses on delivering positive societal benefits through our lending, we are looking forward to seeing the impact this new fund will have on local communities and regional development. We’re keen that the funding reaches creative businesses all over the UK, and supports the delivery of the Sustainable Development Goals by reaching areas with low social inclusion and high economic exclusion.”