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Evaluation of the Investment Readiness Support (IRS) Scheme
Investment Readiness Support (IRS) was set up in 2003 with the aim of improving the ability of client companies to secure investment finance. It was intended to addresses three problems: proposals are often not sufficiently developed to be attractive to investors; entrepreneurs are often unable to ‘sell’ their business proposal to investors; and equity aversion – entrepreneurs are often reluctant to dilute ownership and control of their business, and are unaware of the potential benefits to be gained from involving equity partners. The evaluation was carried out to assess the effectiveness and efficiency of the delivery model for IRS and the initial and potential impact of the scheme.
The study involved an email survey of local enterprise companies (LECs), interviews with the financial community, interviews with LEC managers involved in IRS delivery, a telephone survey of firms receiving support, and interviews with mentors and advisors.
The report finds that at the end of the first year IRS was operating successfully. The distribution across LECs was uneven, probably reflecting the potential target population in each area. Some LECs were ‘proactive’ and awarded a higher number of smaller grants to firms while several were ‘selective’, approving a small number of larger grants. Nine out of ten firms said that IRS had met their expectations and their objectives had been wholly or largely satisfied. The scheme had changed the awareness and practices of firms, and resulted in improved knowledge of the availability of debt/loan, equity and grant finance. The authors suggest that, while there is some deadweight associated with IRS for a minority of firms (in that some of the benefits would have accrued to firms anyway), there is also an important degree of added value and additionality for a similar number of firms.
The report recommends that the IRS services should continue to be provided. It argues that because the programme is still at an early stage, it is difficult to make firm recommendations. It identifies five issues to be considered: whether IRS should be made available to a wider or different range of businesses; whether the current variation across the country should be continued; whether IRS should be more explicitly focussed on equity finance and/or high growth start-ups and young businesses; whether it should be run as an identified (‘ring fenced’) programme or product; and whether the current administrative arrangements are the most appropriate and effective.
Full Report (2 MB, doc)
|Theme/Sector||Investment, Investor readiness support|