A ground-breaking investment fund was launched on 21 March to provide innovative businesses with equity of up to £1m, helping them expand and grow the region’s industries of the future. BEC hosted a Q&A session with Giovanni Finocchio, Investment Director of the MEIF West Midlands Equity Fund at Midven to find out more about the goes into its decision-making.
A ground-breaking investment fund was launched on 21 March to provide innovative businesses with equity of up to £1m, helping them expand and grow the region’s industries of the future. BEC hosted a Q&A session with Giovanni Finocchio, Investment Director of the MEIF West Midlands Equity Fund at Midven to find out more about the goes into its decision-making.
The West Midlands Co-Investment Fund, totalling £25m, has been set up by the West Midlands Combined Authority (WMCA) in partnership with West Midlands Pension Fund to support small and medium-sized enterprises (The fund is available to businesses in Birmingham City Council, Coventry City Council, City of Wolverhampton, and the boroughs of Dudley, Sandwell, Solihull and Walsall.
Investments will be focussed on SMEs that offer high-growth potential and the ability to help supercharge the regional economy. The investment partnership will look to invest in SMEs across a variety of sectors including advanced manufacturing; creative and digital type businesses; low carbon and environmental technology; logistics and transport; construction and building technology.
The fund will be managed by Midven, part of Future Planet Capital, through an investment team. Upon being asked what type of businesses would be of interest to the funding, Investment Director Giovanni said: “Businesses need to have a minimum revenue of around 100,000 a year and a high growth potential. We’re looking for companies that connect to a larger market and founders who have the ability to execute within those markets. We are also looking to work with founders who have a clear vision on exit because at the end of the day, we’d have to return money to our investors, which in this case is the local authority.”
Operating over a 10-year period, the fund will focus on bringing new private investor money to the region and, using a co-investment model, will invest alongside business angels and other private sector investors on a minimum £1 to £1 basis. The fund can invest up to a million pounds over the years.
Giovanni still encourages businesses to enquire even if they only have half the amount or find themselves unable to find the right networks. He said: “We can help, because we have connections with family offices, and also local angel groups. However, if the company has got that kind of investment, it will speed up the whole investment process.
“We often work alongside companies to help them prepare themselves better because the first plan received isn’t always the final plan that’s agreed upon.”
When the plan is received, if it is of interest, there will be a meeting with the founders and the team, which will provide the senior team with a better understanding of the company and its opportunity. There will be two or three more meetings in the interim while additional research is conducted.
Once approved, an offer letter is then provided so everyone knows what to expect and how the investments going to materialize. Then, an internal investment paper will be created to be sent to their Investment Committee for approval, and if approved, it will then be submitted for due diligence and legal approval.
When the funds have been invested, Giovanni says they will support you throughout the entire process. “It’s more than just money, it’s being able to provide a sounding board for those founders, particularly the early-stage founders,” he adds. “We will need to understand how we can help along the path.”
Find the full conversation with BEC here: https://www.youtube.com/watch?v=3RWRSliLiSI
Andy Street, Mayor of the West Midlands and WMCA chair, said: “SMEs are the lifeblood of our local economy so it’s vital that we improve their access to the finance they need to advance. These are exactly the sort of businesses that will help power our regional recovery and future prospects.
“We were the fastest growing region outside London in the decade leading up to the pandemic and we remain a hotbed of some of best companies and brightest minds.
“That’s why, together with the West Midlands Pension Fund, we’ve launched the pioneering West Midlands Co-Investment Fund to back these very businesses. On a deal by deal basis the £25m will be matched by private investors to create a £50m plus capacity.
“We have a wonderfully rich entrepreneurial legacy here in the West Midlands and the WMCA is determined to play its part in continuing that distinguished legacy in the months and years ahead.”
The West Midlands Co-investment fund recognises the pivotal role that high-growth potential SMEs have to play in accelerating the regional economy. SMEs create a remarkably high value for the West Midlands, mainly in the form of jobs, technological development and in attracting investment from other regions or countries. As a result, the fund could generate an extra £49m for the regional economy and create or secure nearly 800 jobs.
Inquiries are now being accepted. Businesses looking to raise investments should contact Midven via their website or through advisors they use. With each investment taking about two to four months, the first few investments could be made anytime after May. Also, look forward to their funding-specific landing page launch event dates.
