Durham County Council has drafted in private equity firm Maven Capital to run a £20m fund aiming to give the local economy a shot in the arm.
Maven will manage investments on behalf of Business Durham, an initiative set up by local authorities.
Business Durham makes investments of between £200,000 and £2m with 10 per cent of funds specifically targeting smaller start-up investments of up to £40,000. One of its most successful investments to date has been in Durham-born challenger, Atom Bank.
Maven Capital has a small business focus and among a raft of investments has provided development capital to pro-cycling brand Endura, made property investments into a variety of hotels and backed the management buyout of Indigo Telecom group.
In February, Maven Capital was also given the mandate to manage £57.5m investments in a Northern Powerhouse scheme.
Bill Kennedy, head of finance at Maven Capital, said he was "delighted to have been selected".
He added: "Alongside providing substantial financial support to suitable small businesses, Maven will work closely with supported businesses to drive value creation and improve operational performance throughout the life of an investment, without interfering on the day-to-day running of a business."
Councillor Simon Henig, leader of Durham County Council, said: “The aim is for the investments to yield a return, so we expect to see the £20m grow to help even more businesses in the future.
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"It’s pioneering for a local authority to do this and we’re very proud to be able to offer support in such an innovative and direct way.”