With very little notice, and a bit of fanfare, the Welsh Government announced a new £15m fund for business growth. In theory, any Welsh company needing £100,000 or more could apply for a fastrack grant.
As my company is currently seeking investment for about that amount of money it seemed like a perfect solution for us. An opportunity to get the cash we needed to help us grow, but without giving away a sizeable chunk of equity in our business. I applauded the government for access to this kind of funding. I read through all the press associated with the launch of this fund, and the relevant page on the government site. It seemed ideal.
However, when I finally had time to go through the documentation in detail I got to the bottom of the second supporting PDF, only to find that the grants were conditional on you already having between 50% and 80% of the project funding already in place, depending on where you are based.
In other words, if I want to apply for the minimum £100,000 for my Cardiff-based business (where funding is only up to 20% of a project value), I need to have £400,000 already available to me from another source. In the few days since discovering this, I’ve spoken to four people who were considering applying, but who had no idea that they would need to find the majority of the money themselves from elsewhere.
While I completely understand the restrictions often placed on the spending of public money, I think that the government need to be better at communicating the exact nature of the funds that they are distributing. The wording of the documents just wasn’t clear enough, and that important detail was tucked away at the bottom of the second document. It took 2 emails and three phone calls to discover exactly whether my company would be eligible. The indistinct map, and public-sector-buzzword documentation, made it nigh on impossible to work out what the exact financial and geographical criteria were.
And this doesn’t even begin to address the fact that this is clearly not a fund for small growing businesses. Which small business can spirit up the minimum £100,000 to match the £100,000 from the government (assuming they’re in an area where they only have to find 50% of the project value) in the 2 months between the fund being announced and the deadline. Raising investment privately is a lengthy and time-consuming business, and finding that kind of money in that short space of time is incredibly difficult. This is a fund which will only be able to be exploited by those companies who happen to have money in the bank already. It’s not going to help small, smart, agile companies who are trying to grow.
I’m happy that the government is attempting to improve the access to finance that is sorely needed by many SMEs, but they need to be better at communicating exactly who it is for, and how best to take advantage of it. The Digital Development Fund is another welcome addition to the funding landscape too, but with a maximum application of £50,000 and only being for as-yet-started projects, again it’s sadly not fit for most ambitious startups with an eye on growth.