PROFESSOR DYLAN JONES-EVANS

  Developing a competitive knowledge-based economy usually requires two important elements namely entrepreneurs with ambitious businesses and a strong investor base that can provide the vital equity funding that can turbo boost the numbers of growing firms that can create wealth and employment The degree to which these two factors impact on the different nations and regions of the UK is the subject of an excellent new report from the British Business Bank entitled “Regions and Nations Tracker: Small Business Finance Markets 2021”. Drawing on information from data specialists Beauhurst, it shows that there have been nearly 15,000 private external equity deals small and medium sized enterprises (SMEs) across the UK.  It proposes that at the heart of developing high growth businesses and a positive environment for investment is the relationship formed between the investor and the companies. Most important of all, the entrepreneur must be as happy with the investor as the investor...

As we end the sixth week of lockdown for the UK economy, the government continues to adjust its support for businesses affected by the Covid-19 shutdown.  This flexibility amongst politicians is a breath of fresh air and the Chancellor Rishi Sunak must be congratulated for responding to the concerns of entrepreneurs and CEOs. The latest initiative involves changing the terms and conditions of the Coronavirus Business Intervention loans scheme (CBIL) which had attracted much criticism for being too slow in getting money out to struggling firms across the UK. For once, Whitehall was not to blame and instead, the banking industry seemed to have been unable to cope with the demand for this type of lending through their present systems.  There was also the suspicion that some lenders were, instead of piling in to help the small firm sector in the way that they had been supported by the taxpayer during the last recession, were reluctant to risk any of their own funds under a scheme ...

Back in 2013, I began a two-year assignment for the Welsh Government to examine the key challenges for Welsh SMEs in accessing finance, an exercise which eventually led to the creation of a new Development Bank of Wales. Since the task and finish group made its recommendations back in 2015, the environment for business has changed considerably and there has been a growing appreciation of the role that SMEs can play in growing the economy.  Understanding the environment in which SMEs operate, especially in terms of accessing finance, remains important to policymakers and that is why the recent publication of the Small Business Finance Markets report from the British Business Bank makes for some fascinating reading.  First of all, it is clear that there is an increasing flow of finance from providers to SMEs, not only in traditional debt lending but also in other forms of funding such as equity or asset finance.  But whilst there is more money available in the system, it wo...

I was delighted to accept an invitation to discuss the imminent creation of a new Scottish National Investment Bank with some its key advisers. The new bank is being created by the Scottish Government which has committed to give it £2 billion over 10 years to provide both debt and equity financing but with a focus on long-term patient capital (typically over 10-15 years). It will start investing in Scottish businesses and communities in 2020 and provide capital for business and infrastructure projects at all stages in the investment life cycle. What is interesting and ground-breaking about the strategy of this new body is that it will take a mission-based approach to investment i.e. Scottish Ministers will set the strategic direction of the Bank by identifying a set of medium-term outcomes for its investments such as transitioning to a low carbon economy; responding to demographic change; and promoting inclusive growth through place-making and regeneration.  This will obviously be ...

This year, there has been an unprecedented interest in the Wales Fast Growth 50, which has now become one of the most sought after accolades amongst Welsh businesses. In two weeks time, we will be completing the search for this year’s fastest growing firms in Wales and with a record number of number of new entries likely to be on the 2015 list, it will be yet another demonstration of the growing vitality of entrepreneurial businesses and their contribution to the Welsh economy. Given the massive contribution of growth firms to both wealth creation and employment, it is not surprising that there is a growing interest around the World in supporting the further development of these businesses. Recently, the Business Development Bank of Canada (BDC) has announced a new initiative to help “high-impact companies”. This follows a new study analyzing the management needs of high-impact firms i.e. those that are increasing their turnover by more than 20 per cent a year. One of the big...

On Wednesday this week, following a Welsh Conservative debate on access to finance for small to medium sized enterprises (SMEs), a majority of AMs in the National Assembly for Wales agreed “that Finance Wales does not fully meet the needs of small businesses across Wales and that access to finance is still a problem for many SMEs”. They also called on “the Welsh Government to establish a Welsh Development Bank as recognised in the report published by Professor Dylan Jones-Evans”. This was another step on the road to ensure that SMEs, the engine room of the Welsh economy, are given the financial support they need to grow to create further wealth, jobs and prosperity for the nation. Whilst there is some way to go, it is not as if the Welsh Government has been sitting idly by since I started the first ever review into access to finance for SMEs for the Welsh Government in 2013. At the time, a major concern expressed by a number of stakeholders interviewed was the fact that there...

Last week, the Development Bank for Wales Task and Finish Group published its report recommending that a new organisation be established by the Welsh Government to ensure that Welsh SMEs (small to medium sized enterprises) get access to the finance they need to grow and develop. But with many expecting high street banks to lend to small firms, why should the public sector intervene in this market place? Over the last six years, lending to SMEs has fallen as various restrictions have been imposed on, and developed by, the banking sector in the UK in response to the 2008 financial crisis and its aftermath. Whilst the UK economy has recovered during the last three years, numerous reports show that bank lending has not kept pace with the growing economy. Similar to other studies on funding SMEs, the Welsh Government’s access to finance review has detailed the continuing decline in bank lending to businesses in Wales. For example, data on bank lending to SMEs from 2011-2014 shows ...

The Welsh Government may wish to consider several options as to how to take forward the findings of the access to finance review. For example, whilst there have been calls for a new state-owned bank, it could be argued that the foundations for such an organisation already exist in the form of Finance Wales. However, unlike other state-owned financial institutions that have been examined as part of this review, the main focus of Finance Wales has, for the last five years, been on establishing its reputation as a leading fund manager rather than on directly promoting economic development in Wales. In this respect, the Welsh Government could give Finance Wales a more direct remit so that economic development becomes its main priority, especially as questions clearly remain about its commitment to directly supporting SMEs in Wales, despite the presence of new board members. However, it is the conclusion of this review that, in its current form, Finance Wales is no longer fit for pur...

During the last ten months, the access to finance review commissioned for the Welsh Government has undertaken an extensive analysis of access to finance to SMEs within Wales. In June 2013, it made a series of recommendations in the first report that are currently being implemented by the Welsh Government. Some of these - including the development of a commercial finance comparison website, close links between the banks and business support, and the improvement of trade credit via the Welsh Government’s own procurement rules - have the potential to make a significant impact on access to funding for Welsh SMEs. In addition, the launch of Start-Up Loans programme in Wales could provide a major boost in enabling many potential entrepreneurs to have the in initial funding they require to begin a new venture. The evidence from the report suggest that major challenges still remain and that the current approach in providing access to finance in Wales is not fit for purpose. For the ...

The first part of the Access to Finance review noted the role of Finance Wales, which is wholly owned by the Welsh Government, in providing finance to Welsh SMEs since its creation in 2001. It is currently managing over £200m worth of investments in Wales over four live funds, namely: The £150 million Wales JEREMIE Fund that aims to encourage effective investment in small and medium-sized businesses. The Fund is backed by the European Regional Development Fund, the Welsh Government and the European Investment Bank;  The £40 million Wales SME Investment Fund which is backed by the Welsh Government and Barclays and invests in micro, small and medium-sized firms; The £6 million Welsh Government-backed Wales Micro-business Loan Fund; The £10 million Wales Property Development Fund, which makes loans to small and medium-sized Welsh construction companies developing small-scale, non-speculative commercial and residential property.  In addition, Finance Wales also manages th...