News

Sources of Finance for North East Businesses

Emma Neal

05 Oct 2016

Different investors look for different things from a business. The key is identifying what people do want from you and the investment they are making.

True, everyone wants a return on their investment but experienced investors, venture capitalists and so called business Angel investors do know they can lose their cash. If you are to persuade them to take a risk there has to be a good reward.

So what is a good return? Well that also depends but most venture capital investors expect at least a 40% IRR (internal rate of return). That, put simply, is around 5 times their cash investment back after 5 years. People will dispute this, but it serves to illustrate that if you want to attract an equity investor, one who shares the risk with you, then they want a good return.

Of course, you can use a bank who, in theory, will lend you cash in return for a simple percentage interest rate, currently anything between 6-18%. However, they won’t take the same risk as the reward is smaller, and they can’t afford failures, one reason why most banks won’t lend to start-ups with no sales, assets or track record.

There are alternatives to the more traditional sources of venture capital, business angel as “equity” finance (selling shares in your business) and simple bank loans. However the same principles apply. So a quick look at what you need:

  • A clear simple but comprehensive business plan
  • Demonstrate how your business works and how it makes money
  • An experienced management team and show you really understand the business
  • A clear grasp of the finances and legal issues around your business.

The alternative sources of finance; mostly “Crowdfunding” and “Peer to Peer lending” websites are not an easy option and still require all of the above and often more.  There are so many participants seeking cash in competition with you now on the web that you do need a clever marketing campaign to make this all work. The better crowdfunding sites will coach you but it’s still hard work, but like all other investors you can get the cash if you are good!

Crowdfunding, is effectively selling shares in your business to the public. There are over 30 platforms to choose from in the UK alone. The better known ones are Crowdcube and Seeders, ask around and see what people who have raised finance really thought and try and talk to ones that failed too.

Peer-to-peer lending is just that, you are borrowing money from people via a broking website on-line for a simple interest rate. Be warned interest and other charges vary and most small businesses will end up paying between 8% and 18% or more. Funding Circle is the most famous site but there are many others. They also expect high-standards and will assess you and your business to determine the rate of interest to charge.

The North East has benefitted from the JEREMIE funds over the last 6 years with in excess of £140m invested into more than 800 business alongside over £200m of additional private cash. These funds become fully invested at the end of December this year but are due to be replaced by a further £120m for the North East sometime in 2017.

At Rivers we have run the £7.5m North East Microloan Fund and the £10.5m North East Angel Fund from the Finance for Business North East programme.

The North East Microloan Fund provides ‘Microloans to Fund Big Ideas’ committed to providing straightforward loans between £1,000 and £25,000 with the potential in exceptional cases to go to £50,000.

The North East Angel Fund is a specialist fund investing in new and established small companies with growth potential in the North East of England.  The Fund will typically invest between £10,000 and £150,000 in any one funding round. The Fund operates as a normal venture capital fund, with investment terms to match.

Rivers are now working to raise larger sums of equity finance and have a private investment activity called WhiteGold. This is new but builds on the last year or so where we have done a few larger deals working with private investors.

What differentiates us from other fund managers is our ability to take the entrepreneurs position as all our senior team have created, successfully managed and raised finance for their own businesses.


Sources of Finance for North East Businesses

Newcastle-based innovative cold brew coffee company, Point Blank Cold Brew has secured a £25,000 loan from the Finance for Business North East Microloan Fund, managed...

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Corbridge-based full service restaurant and cocktail bar, The Duck House has successfully secured a £25,000 microloan via the Finance for Business North East Microloan Fund....

Sunderland-based ‘Doggy Day Camp’ and grooming parlour Woofs n Scruffs has secured a £14,000 loan via the Finance for Business North East Microloan Fund. Managed...

A new regional business group, Exclusive Business NE has secured a £25,000 loan via the Finance for Business North East Microloan Fund. The regional loan...

Teesside-based digital imaging specialists, Peak Aerial have secured a £25,000 loan via the Finance for Business North East Microloan Fund. The regional loan scheme is...

Newcastle-based ‘clean’ food cafe and coffee bar Love Lunch has secured a £10,000 loan via the Finance for Business North East Microloan Fund. Managed by...

Pioneering design consultancy, Forward Design Innovation has secured a £15,000 loan via the Finance for Business North East Microloan Fund. The regional loan scheme is...

New data from the managers of the North East Microloan Fund has shown that companies in the South Tyneside area are more successful in applying...

Ashington-based Innovision Global has secured a £50,000 loan through the Finance for Business North East Microloan Fund, a regional loan scheme managed by Rivers Capital...

Regional Fund Managers Rivers Capital Partners have re-located their Tees Valley-based operations. The move to the Victoria Building at Teesside University will better support the...

Dedicated to supporting North East businesses to start-up and grow, the North East Business and Innovation Centre (BIC) has recently entered into a collaborative partnership...

The North East Microloan Fund has £1m to invest in 2016 to support start-ups and small businesses looking for simple loans to expand their operations...

South Tyneside based Kates Slimming & Fitness Club has secured a £10,000 loan through the Finance for Business North East Microloan Fund, a regional loan...

Former Goldman Sachs trader, Dr Chris Cathey returns to his local roots of Newcastle after enjoying a successful fifteen year career.  Chris joined Goldman Sachs...

The Finance for Business North East Microloan Fund managed by Rivers Capital Partners has had one of the most successful operating years since its inception...

The Parlour at Blagdon has received a £35,000 Microloan from the Finance for Business North East Microloan Fund managed by Rivers Capital Partners. The Parlour...

Newcastle-based Westerhope Brake & Clutch Services has received a £25,000 loan via the Finance for Business North East Microloan Fund. The regional loan scheme offers...

Newcastle-based architects, Sadler Brown have received funding through the Finance for Business North East Microloan Fund, run by Rivers Capital Partners.  The award-winning architects aim...

Dedicated to helping businesses across the country to succeed and grow, the BE Group have recently entered into a collaborative partnership with Rivers Loan (a...

Spearhead Interactive are an industry recognised and award winning company solving business challenges through the use of emerging technology. Specialising in the development of immersive...

Washington’s Three Horse Shoes has opened their doors after securing a £40,000 loan through the Finance for Business North East Microloan Fund, managed by Rivers...

Gateshead-based independent café Altin Coffee House has received a loan through the Finance for Business North East Microloan Fund run by Rivers Capital Partners. Founded in...

Hartlepool-based hot sauce manufacturer Kilimandjaro has received a five figure investment from the Finance for Business North East Microloan Fund to support their recent growth....

South-Tyneside-based automotive company JLS Automotive has secured a £20,000 loan through the Finance for Business North East Microloan Fund, a regional loan scheme run by...

Middlesbrough-based hair extension supplier has secured a loan from the Finance for Business North East Microloan Fund, a regional loan scheme managed by Rivers Capital...

A North-Tyneside-based craft business has secured a £25,000 loan through the Finance for Business North East Microloan Fund, a regional loan scheme managed by Rivers...

Ponteland-based computer and technology repairs company, Fortress Computers secured a £7,000 loan from the Finance for Business North East Microloan Fund managed by Rivers Capital...

South-Tyneside-based recruitment agency CAS (Composite & Aerospace Solutions) has secured a five figure sum through the Finance for Business North East Microloan Fund. This is...

    People forget how many hundreds of business plans that lenders and investor like Banks and Venture Capitalists see each year. It’s a lot and if...

A regional digital advertising agency has secured a cash boost from the Finance for Business North East Microloan Fund, a regional loan scheme managed by...

A local sports equipment business has gained a £20,000 loan from the Finance for Business North East Microloan Fund, a regional loan scheme managed by...

A microbrewery based in Bishop Auckland, has secured a £25,000 cash injection from the Finance for Business North East Microloan Fund, a regional loan scheme...

A local waste management business has secured a £13,000 loan investment from the Finance for Business North East Microloan Fund, a regional loan scheme managed...

A Middlesbrough design company, Dearden, has secured a £25,000 loan from the Finance for Business North East Microloan Fund, a regional loan scheme managed by...

  *Article orignally in the North East Times   North East business growth... driven by equity and loan finance says, Jonathan Gold, founding director of Rivers Capital Partners I...

A local Ashington stone product manufacturer has received a cash injection from the Finance for Business North East Microloan Fund, a regional loan scheme managed...

A wholesale dessert company in Marske has secured a five figure investment from the North East Microloan Fund to grow their sweet business into a...

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A small North Tyneside-based family business is ‘fixed for funding’ following a £25,000 investment from the Finance for Business North East Microloan Fund. From their premises...

Eminent Engineering specialises in the fabrication, treatment and erection of bespoke steelwork projects for blue chip construction companies such as Bam Construction, Mansell Construction and...

A newly formed Bowburn-based business has recently secured a £25,000 funding boost from the Finance for Business North East Microloan Fund. MASfab provides steel fabrication, installation...

Whitley bay-based technical development company Cogiva steps up their operations following a £10,000 investment from the Finance for Business North East Microloan Fund. Cogiva provides bespoke...

Jonathan Gold, a founding partner and Director at Rivers Capital says he's on a mission.  Over the last few weeks he has started giving talks...

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