Guernsey tries hand at funding innovation…with £25m

Monday 19 February 2018

Guernsey is going to give funding entrepreneurship a go, with its own version of Jersey’s Innovation Fund – but with five times the money.

Guernsey's fund will feature two other crucial differences: the government will take a slice of each company it invests in, and no politicians or civil servants will be involved.

Jersey's ill-fated innovation Fund was set up with a £5million investment pot of in 2013. Six companies received funding – some of which enjoyed significant success, with one, BabyHub, gaining national awards. But it later emerged that one, software firm Logfiller, would never be able to pay its £500,000 States loan back.

Its collapse prompted three reviews into the fund’s operations, public questions over whether the government should have ever become involved in private enterprise, and even a criminal investigation, which remains ongoing.

According to the most recent figures, the States are still waiting for £1.4million of their money to be repaid.

Pictured: Logfiller - one of the companies that received an Innovation Fund loan - is still being investigated by the Police.

Now Guernsey’s States is having a crack at kick-starting innovation, with an investment of up to £25million.

But theirs – a long time in the Planning by the island’s most senior ministers Deputy Gavin St Pier and Deputy Lyndon Trott, and apparently delayed in launching due to Jersey’s situation – will take a slightly different approach.

Unlike Jersey's, the Guernsey Investment Fund will be an equity rather than a loan model, meaning that the investment will equal a stake in the business. Politicians and civil servants will also be kept out of decision-making. 

The fund will managed by Ravenscroft, and at first, they’ll be looking to boost tech companies, but later hope to welcome applications from the sectors of property and infrastructure.

That taxpayer money will be joined by up to £5million from MXC Capital Limited, as well as an unconfirmed amount from Pula Investments Limited, the family office of Ravenscroft’s chairman Stephen Lansdown. 

Pictured: Guernsey's most senior politician Deputy Gavin St Pier praised the new fund.

Deputy Trott hinted that they had learned from the lessons of Jersey’s experience. 

“We have looked across the globe to work out what will be the best practice for our model, and remembering that Guernsey has an International recognised expertise in this area, we have found a very robust system. The second thing is that no public servant, whether that be politician or civil servant, will play any role at all in making decisions – that will all be down to the board and the investment managers. Finally, we are not setting up a bank, there will be no loans… Importantly, if things go wrong with an investment the downsides are no worse than if we were giving loans, but the upside is massive in comparison,” he told Express.

Speaking of his high hopes for the fund, he added: “Do I think the States will stop at this £25million? No. Who knows, but in a decade or so I can see the Guernsey Investment Fund having a seed investment in a business in the same levels of success as Facebook, Amazon or Apple - all of those had to get funding at the start, and the Guernsey Investment Fund will be a better source of capital for innovative businesses than anywhere else.” 

Deputy St Pier described the launch as “an exciting day for all those involved in business.”

Chairman of the Investment Fund Board Gilbert Chalk commented: “The board is honoured to be given the opportunity to launch the fund which we believe will stimulate growth, generate employment opportunities and diversify the tax base. It’s fantastic to see that there is already a number of interesting projects which are looking for investment.”