Invest Northern Ireland's Fund of Funds Model

The Fund of Funds (FoF) is a holding vehicle through which Invest Northern Ireland (Invest NI) organises the delivery of a continuum of risk capital funding, from start-up finance to development capital. The model includes six live funds, totalling £252.2m as of May 2019, that offer a mix of debt, equity and mezzanine finance to Northern Ireland SMEs which are growing or exporting (or have this potential). The FoF model draws on four main funding streams: European Regional Development Funding, Financial Transaction Capital from UK Government, Invest NI baseline funding, and private investment.

In April 2019, SQW was commissioned by Invest NI to undertake the second interim evaluation of the FoF model, covering the period from January 2014 to June 2018. The primary objective of the evaluation was to review the effectiveness of the model, taking into account ten recommendations set out in an earlier NIAO report (Access to Finance for small and medium sized enterprises (SMEs) in Northern Ireland, September 2017), and to recommend changes and improvements for the future. A logic model, report and set of recommendations on future delivery were produced based on an analysis of strategic and contextual data, and in-depth interviews with a range of stakeholders; including representatives with management, governance and delivery responsibilities for the model, and external stakeholders in the access to finance landscape.

The report, available here, found that the FoF structure provides a robust mechanism to oversee delivery of a suite of access to finance funds in Northern Ireland, at a relatively low cost. The model has supported the development of the Northern Ireland access to finance eco-system and delivered some benefits to business, through providing context and helping to give confidence to both public and private investors. The research found that many specific benefits of these interventions would have been realised without the FoF model, however, the FoF model has enabled those involved to appreciate the bigger picture, and delivery processes to happen more smoothly, quicker, and probably on a slightly bigger scale.