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Square One Law helps create innovative funds for SMEs

Partner Neil Warwick, comments on the demand for innovative SME funding models.

“The North East has been a trail blazer for creating innovative public/private funds for SMEs which have helped drive economic growth for the region.

We saw the UK’s first suite of regional investment funds comprising the North East Regional Investment Fund I, Seed Capital I and the Local Investment Fund in 1999, in response to the acute need to bridge the so-called equity gap between mainstream bank and investors. Since then, right up until today, the region has been at the forefront of delivering innovative SME funding structures, and lawyers from Square One Law have played a central role in the formation of every North East fund.

“To date, an estimated half a billion pounds in funding has been generated in 20 years from over 25 North East funds established primarily to support locally based SME and high growth businesses. For every £1 invested by a fund there is at least another £2 of private sector investment leveraged into the economy. The creation of the eco-system of fund managers and professional advisers, the jobs created, and the impact on supply chains, has all had an enormously positive effect on the economy of the North East.

“The largest increase in small business start-ups in recent years has been in the North East. Given the popularity of these funds and the fact that every single one of them has been fully invested, there must be a direct link between the fund creation and the number of new business start-ups.

“It is notable that members of our team has been involved in the creation of every one of the funds delivered in the North East and we have implemented almost every type of fund structure. We believe no other team has our breadth of experience in the creation and deployment of financial instruments.”

Square One Law’s Funds team includes Neil and corporate partners Mark Lazenby and John Hammill.

Neil continued:

“Specialising in EU and Competition law gives a unique perspective on fund creation and has allowed me to advise a variety of public sector bodies including representing central Government and quasi—public sector organisations, infrastructure operators as well as advising private organisations and international corporations on the implementation of EU structural funding, competition law compliance and the application of State aid.”

Mark leads the finance team at Square One Law and is responsible for managing panel relationships with funders including Santander, Atom Bank and FW Capital. Mark also specialises in corporate law and has acted for both fund managers and investee companies in relation to the Finance for Business North East (FBNE) funds.

John has particular experience of advising on fund creation and investments. He developed his unique perspective whilst working in-house for One North East, where he was heavily involved in the JEREMIE initiative. Since then, he has acted for a number of FBNE fund managers and investee companies and assisted in the establishment of the North East Fund.

John said:

“We are very hopeful that 2017 will be an extremely important year for North East SME funding. After the period of sensitivity leading up to the General Election is over, we are confident that there will also be announcements for the fund created by Business Durham, the Northern Powerhouse Investment Fund, and also the North East Fund, the replacement for the FBNE fund. This will make hundreds of millions of pounds of funding available to SMEs in the region.”

Most recently, Square One Law acted on the creation of the £10 million FW Capital North East Property Fund created in response to strong demand from SME construction and property development companies, who are finding mainstream finance from traditional sources no longer suitable for their needs.

Mark said: “The fund is based on the highly successful Wales Property Development Fund that has been operating for almost four years and this is the first time a fund like this has been set up in England. It is hoped it will help kick start development in smaller scale property ventures across the North East which should help alleviate the housing shortage.

“The use of innovative funding structures like this which help recycle public monies and create public/private partnerships will become a necessity, and as the North East has been at the forefront of fund development, we stand a good chance of leading the way in the UK.”

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