Page 2: Types of finance
Venture capital is finance, in the form of shares or loans, which is provided by an investment institution to back a business venture which is expected to grow in value. Organisations like 3i are prepared to provide finance for growing small and medium sized companies in exchange for part of the ownership of the business. It often goes well beyond simply providing finance for growing organisations – involving taking an active interest in the fortunes of that organisation.
What does 3i do?
3i is a company whose business is investment. 3i was founded in 1945 by the Bank of England and the major UK banks to invest in small and medium sized enterprises. Since then, 3i has gone on to play a key role and provides increasing sums of capital for business growth. 3i floated on the London Stock Exchange in 1994 and is now one of the top 100 UK companies, with a current market capitalisation of around £3 billion. 3i is able to provide a highly personal service by working through a network of offices across the country. This enables 3i to keep close to the companies which it backs in the independent business sector. In most cases, the decision to invest will be made by the local 3i office in Aberdeen, Manchester, Southampton or wherever.
3i is a risk taking organisation that shares the entrepreneurial attitudes of the companies it backs. Investment decisions are based on judgements of management quality and the potential of a business, not just its track record. The decision to become involved draws upon not only the skills of individuals, but also on 3i’s collective experience built up over more than 50 years.