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Abstract

To address the difficulties businesses face with obtaining funds for investment, the Business Secretary, Vince Cable, announced the setting up of a Business Bank, and the Angel CoFund. The analysis in this article reveals that all is not as it would seem. Far from being a public sector intervention, the role of the bank is to encourage the development of private sector solutions. The Angel CoFund has had some successes but a company needs to ‘secure the interest’ of a first time investor. The article argues that German-style Sparkassen are needed: that is, regional banks that provide the seed money for SMEs to get off the ground and grow. Without something like this business growth in the UK will be wanting.

Keywords

Angel CoFund Business Bank EU State Aid regional banks SME funding Sparkassen

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References

Angel CoFund (2013) Homepage. Available at: http://www.angelcofund.co.uk/index.htm (accessed 23 July 2013).

BIS (Department of Business, Innovation and Skills) (2012a) New Business Bank to Support up to £10 Billion of Business Lending. Press release, 24 September. Available at: http://news.bis.gov.uk/Press-Releases/New-business-bank-to-support-up-to-10-billion-of-business-lending-6808d.aspx (accessed 23 July 2013).

BIS (Department of Business, Innovation and Skills) (2012b) £50 Million Business Angel Cofund Invests First £7.2 Million. Press release, 8 May. Available at: http://news.bis.gov.uk/Press-Releases/-50-million-Business-Angel-CoFund-invests-first-7-2-million-679bd.aspx (accessed 23 July 2013).

Breedon

(2012) Boosting Finance Options for Business. Report of Industry-Led Working Group on Alternative Debt Markets, London: Department of Business, Innovation and Skills.

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The Engineer (2012) Government-funded bank set to benefit manufacturing SMEs. The Engineer, 24 September. Available at: http://www.theengineer.co.uk/channels/policy-and-business/news/government-funded-bank-set-to-benefit-manufacturing-smes/1014009.article (accessed 23 July 2013).

Forsyth J (2013) Vince Cable hunting chairman and non-exec for Business Bank. CityAM, 8 July. Available at: http://www.cityam.com/article/vince-cable-hunting-chairman-and-non-exec-business-bank#sthash.I7YG3L7r.dpuf (accessed 23 July 2013).

Groom B (2013) Cable to start first phase of Business Bank. Financial Times, 10 April. Available at: http://www.ft.com/cms/s/0/b3ca5360-a139-11e2-990c-00144feabdc0.html#axzz2ZtSMReMO (accessed 23 July 2013).

Hurley J (2013) Cable’s bank ‘may not meet the needs of UK business’. The Telegraph, 14 July. Available at: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10178906/Cables-bank-may-not-meet-the-needs-of-UK-business.html (accessed 23 July 2013).

10.

Simpson

CVJ

(2013) The German Sparkassen (Savings Banks): A Commentary and Case Study, London: Civitas.

Vince Cable’s Business Bank: A broker’s viewpoint

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