Peter Tomlinson, chairman Advantage Creative Fund, looks at how the fund has contributed to the growth of the creative sector in the West Midlands.
Even before the credit crunch and the banking crisis, the creative industries have always found securing loans and investment a challenge.
This might be that there has always been a perception anything creative is a risky investment.
It could also have something to do with the fact that perhaps creatives are more comfortable creating ideas than playing the role of a corporate executive.
The underlining message however, is clear. The creative industries are a vital part of the economy and will continue to grow in importance in terms of employment growth and contribution to the overall prosperity of UK plc.
The opportunities that exist here in our region to develop our creative talent are both exciting and vast.
As chairman of the Advantage Creative Fund, a venture capital fund dedicated to supporting and developing the West Midlands Creative Sector, I have seen first hand the many exciting creative businesses that have been conceived, nurtured and developed in our region.
The breadth of ideas and talent is breathtaking. As a fund we have invested in a diverse range of creative businesses from video production companies to computer software designers.
We have supported with funding a fashion designer and a company that provides treatments for anxiety online. Not to mention the development of a cost-effective plastic trombone for use in schools and a company that manufactures collapsible football dugouts.
The Advantage Creative Fund was established in 2003 and is sponsored by Advantage West Midlands, the European Regional Development Fund and Arts Council of England and we were a UK first.
The concept is simple, a venture capital fund that is solely aimed at investing in the West Midlands-based creative industries. Due to the fact that our funds came from the public sector we can, therefore, unlike many other venture capital funds, be more commercially patient in terms of return and this is vital when successfully nurturing creative businesses.
In addition ACF will reinvest returns back into the creative industries thereby making this a sustainable evergreen fund. That is not to say that as a fund our team did not apply the rigorous procedures and due diligence that you would expect from an investment fund. We did.
Our team of investment managers, all of whom are skilled and experienced in the sector, are able to identify clearly the opportunities and risks and therefore engage with our investees to work out the best funding solution for both parties.
As a fund we are also responsible for achieving a wide range of other outputs that I am delighted to reveal, in the five-year period covering our first investment contract period, we have exceeded.
Our 76 investments in 54 creative companies, higher than our target figure, has resulted in the creation of 310 jobs – double the targeted number and safeguarded a further 202. 19 new businesses have been created because of ACF investment and it is estimated that a total of just under £25 million of new sales has been achieved by our investee companies.
In total, the Advantage Creative Fund has invested a total of £5,100,000 in the creative industries in the West Midlands during our first five years of funding.
Would the breadth and scale of this investment have taken place without ACF?
My view is no it would not. Of course, some of the companies that have received investment from ACF may have been able to secure commercial funding but many would simply have been turned away or indeed, would not have been investment ready.
This is where ACF also plays an important role. Not only do we invest but we support applicants through the process. Many have approached ACF for funding and were quite simply not investment ready.
Our team will advise on writing business plans, support creative entrepreneurs to identify how to market their offer and how the investment can be maximised to ensure business growth.
This is why to many creative businesses the ACF has been the first and in some cases the only port of call. There is no doubt that we have played a significant role in developing the West Midlands creative industries during the five year’s we have existed.
As ACF completes its first five year contract, what of the future for the Fund?
We believe passionately that the facts speak for themselves.
ACF has been phenomenally successful. It has over-achieved on its targets- more importantly it has proved that a fund based on the model of ACF is vital if we are to continue to develop and support the region’s creative entrepreneurs and innovators.
Given the current economic climate, I would suggest that normal commercial investment channels are going to be even harder to find than before.
Without the continuation of the Advantage Creative Fund will the creative talent waiting and ready for the next level of support to facilitate their growth find other investment opportunities? I believe it will be difficult. Currently in our pipeline we have many strong and exciting investment propositions from creative innovators who need funding now to develop their businesses.
We have successfully demonstrated that ACF has an important role to play. We, with our friends in the creative industries, have embarked on a journey from which there is no turning back.