Last month in the news items, I referenced a new funding source for Advanced Manufacturing and Materials Investment from the Greater Manchester Combined Authority (GMCA) called GM Advance.
Having since met up with one of the transaction managers in the team, I thought I would provide more information as to what this £10m fund does and who it is for.
The Fund will offer a range of subsidised debt and equity products to companies in the sector, helping to retain, grow and attract new businesses into the region, enhancing innovation, and move from incremental development to more technically challenging activity. The suite of products has been designed to bridge a gap in the market, helping businesses grow stronger, quicker.
Before you decide whether a fund for advanced manufacturing is for you or not, it is worth considering their definition, as it covers a multitude of areas that you might not immediately consider as ‘advanced manufacturing’
It is defined as production processes that integrate advanced science or technology into manufacturing. This includes the use of digital and the use of automation into manufacturing and this latter aspect is key as brining in automation into the manufacturing process meets those broad criteria.
The fund will consider any application that meets these criteria, although there are four priority sub-sectors which are:
- Sustainable Materials
- Advanced Machinery
- Digital Manufacturing
- AI and Machine Learning
There are four types of product:
Micro Equity of £20k to £50k
- Helps develop a minimum viable product
- Minimum 50% match funding
- Standard terms for a set percentage of equity (2-5%)
- Fund open for applications on a time restricted windows
Core Equity of £51k to 250k
- Commercialise viable propositions
- Enable early-stage businesses to adopt advanced manufacturing techniques
- Enable production or rollout of sustainable materials
- Minimum 50% match funding
- Will follow private sector match terms
- Funds open for application at any time
Short Term Debt of £250k to £500k
- Help bridge short-term funding gaps which are inhibiting growth,
- Provide working capital by way of debenture (can be just stock or invoices)
- No personal guarantees required
- No match funding required
- Debt intended to revolve
- Funds open for application at any time
Long Term Debt of £250k to £1m
- Growth capital, asset purchase, adoption of advanced manufacturing techniques
- Enable production or rollout of sustainable material
- Secured by way of debenture (can be just stock or invoices)
- No personal guarantees required
- No match funding required
- Option of fully amortising or bullet repayments
- Funds open for application at any time
The terms available from GMCA will be more favourable than commercial comparables and therefore will likely be classed as a subsidy. The fund will waive all standard deal fees including its legal, monitoring and arrangement fees. Each successful application will also be scored on a balanced scorecard mechanism looking at the strengths and weaknesses and the strategic fit, risks, economic benefits and job creation metrics. The score will then impact the interest rate or the valuation of the business, depending on whether the deal is debt or equity:
Debt – the percentage discount on debt will be between 0% and 50%
Equity – the business valuation will be increased for the purposes of the investment by between 0% and 30% and thereby reducing the dilution to other shareholders.
The Fund is open for companies ranging from new startups to SMEs, and to be eligible for funding, applicants need to be based in Greater Manchester or have tangible plans to relocate or expand operations into the region. This fund has specifically been set up to fulfil a need and a gap in available funding, so if you think it might be relevant to you, it is certainly worth looking at.
If you or your clients would like to find out more about GM Advance and how we could help you to make an application, please get in touch.