Private and public sectors launch £20m fund

INSURANCE group RSA and Vince Cable’s Department for Business are pumping £20 million into a new funding scheme for small companies developed by Artemis Fund Managers co-founder Lindsay Whitelaw, The Scotsman can reveal.

Vince Cable has teamed up with the private sector to launch the fund. Picture: PA

Urica, launching in Scotland today before being rolled out across the UK, is targeting “better-placed growth companies” turning over £5m to £100m a year.

Customers will give Urica a list of their key suppliers, who will get their invoices paid by Urica after just 14 days, minus a 2 per cent fee. The customers will then pay Urica the full face value of the invoice after 60 days.

Whitelaw, pictured below, said the fund would slash the time suppliers have to wait for invoices to be paid, but that firms wouldn’t be tied into using the scheme for each invoice, instead picking and choosing which bills they wanted to settle early.

He said Urica wasn’t competing with other asset classes – such as bank funding or invoice financing – because it was accessing money from institutional investors.

Whitelaw said: “We’re already talking to other investors about raising more cash and we expect to complete fundraising rounds this year and next year.

“Institutions are receiving at least a 7 per cent return on their investments and are getting access to small firms that aren’t connected to the stock market.”

Urica is able to pick the companies with which it wants to work because its software system has access to the databases of Euler Hermes, the pan-European trade insurance provider that covers €750 billion (£633bn)-worth of business for 40 million customers.

The company’s internet-based supplier early-payment platform was developed by technology director Jean-François Diaz, who created General Electric’s factoring system and who worked with Urica chief operating officer Ian Fitz-Harris and sales director David Totney at Euro Sales Finance, which in 1995 became the first company to raise funds on the Alternative Investment Market (Aim).

Before launching Edinburgh-based Artemis in 1997, Whitelaw built up his experience of raising development capital for small businesses at Ivory & Sime and the Glasgow office of 3i.

He said: “This is a whole new asset class. It could eventually become a multi-billion pound market.”

Cable said: “A lack of access to finance is still choking off too many small businesses, preventing them from growing. We are taking actions to support small and medium-sized enterprises including allocating £10m to Urica to enable it to establish a supply chain finance platform.”