Partner – Head of New Investments
The UK’s growth capital industry invests money into small businesses to help them to grow. And building bigger businesses means good financial returns for investors.
But, for a moment, I want to think about whether the growth capital industry is just building bigger businesses. Or whether it is also building better businesses. I mean better for people, our society, and our planet? Perhaps three answers………Yes, Normally and Could do better……
Yes …. Growth Capital investment is used by UK businesses to help them to grow, which nearly always means more jobs, typically means more exports, and often more British led new technology. For example, we recently had a look at YFM’s own portfolio and found:
Normally… Bringing a professional investor into a business should also make a real difference to its governance. I don’t just mean proper board meetings and an independent chair. But also making sure Health& Safety is on every board agenda, making sure there is an Anti Bribery & Corruption policy in place, and ending any bad tax practices.
Could do better… However growth capital investors also have a unique opportunity to put “Impact” on the agenda of the businesses they invest in – ie Impact on people, society and the environment. At YFM we have asked each of our portfolio of businesses to think about their Impact and to score themselves against 40 Impact criteria. We will then help them to pick 1 or 2 specific things that they will target for improvement next year. This will then go on the monthly board agenda and hopefully a measurable outcome reported when the Impact review is done again in a year’s time.
It’s early days but we have already had some interesting commitments from our businesses to: reduce energy consumption through a factory efficiency programme, switch to green tariff energy, ensure all waste aluminium is recycled, improve gender staff ratios, start a work placement scheme with a local college, and put in place mental wellbeing support for employees. All sound ideas that are good for business and good for people, our society and our planet.
There are about 1000 business funded by VCT investors in the UK and many more funded by other growth capital investors. What if they were all encouraged to commit to 1 or 2 things to improve their Impact? Not a bad thought for Christmas time.
This financial promotion has been issued and approved for the purposes of Section 21 of the Financial Services and Markets Act 2000 by YFM Private Equity Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 122120). YFM Private Equity is the investment adviser to the VCTs and is a wholly owned subsidiary of YFM Equity Partners LLP (OC 384467) Registered in England and Wales. Registered office: 5th Floor, Valiant Building, 14 South Parade, Leeds, LS1 5QS.