Welcoming our new treasurer
Frank Knowles, former Merrill Lynch investment analyst and a founder of New Street Research turned private investor and advisor, to bring a wealth of expertise, experience and energy to Foundation East board…
As we all wonder whether we're welcoming Spring or grieving climate breakdown, whether Brexit will be hard, soft or not at all and whether the government will hear the call of the Responsible Finance sector to do more to provide access to finance for the nation's SMEs, we thought it timely to bring you a little slice of certainty: Foundation East has appointed a highly experienced director to our board. With the brief to lead our finance committee, Frank Knowles' 30 years of highly relevant experience is sure to help us to further our positive impact across the region.
So, without further ado, allow us to share a quick Q&A with our new treasurer, who happens also to be an investor in our award winning social enterprise client Harry Specters and the social investment specialist, Clearly So.
Why did you want to take on the role of treasurer with Foundation East?
I came out of full-time work about 18 months ago and I was looking for opportunities that matched my skills with something I believe in and am passionate about. I had 30 years in the city as a financial analyst, which means I've got experience working with businesses across a lot of different industries, globally.
And I have worked as a lending officer providing funds to medium sized businesses. I've also, on the other side, advised investors in bonds on how they should look into the risk of investing in companies and advised companies on how to structure their balance sheet and attract investment, so I've got a pretty good understanding of the lending process.
In the last 18 months, I've become more involved in start-up and smaller company advice, particularly for social enterprises. I'm a member of a social impact angel investor group that puts money into startups with a positive purpose and I'm a director of a group in Bishops Stortford called Go2X, which is a group of industry executives who give expert advice to local businesses. So, I've been getting more involved in smaller company funding.
I live in Saffron Walden and have family in Bury St Edmunds, so when the position came up I thought, ‘Now here's an opportunity to actually use some of that expertise and help a local business, which is helping other local business, which otherwise would not be able to raise capital. So it was a perfect fit in terms of what I want to do and what Foundation East needs.
Foundation East itself is in the process of change. Change is challenging and interesting and great to be a part of when you can see how to actually make a positive difference.
Given your experience as an analyst, what do you think the greatest challenge is that SMEs, micro businesses and social enterprises in the East of England face?
Charities and business of every size all face the challenge of how to assemble and fund the resources necessary to grow, whether financial resources, human resources, expertise or partnerships.
Businesses in the East have some advantages. It's not one of the most deprived areas in the country; within (though not throughout) the region are good transport links and high-quality education establishments providing well qualified people.
Because of these perceived advantages, the region doesn't get a lot of external funding and support. In my view, the hardest thing is not to get seed funding: there are a variety of accelerators, grants and so on. But moving from that to where you're big enough to be of interest to the commercial lending sectors, there seems to be a funding gap.
For me, this gap between getting going and reaching critical mass is the biggest challenge for businesses in this region. And although there is a growing range of alternative finance providers in the form or peer-to-peer lending and crowd-funding platforms, it's good to have a regional solution to a regional problem, it's good to have Foundation East.
Who would you like to see do what about this funding gap?
Well Foundation East is already stepping in, but as to who else's responsibility it is, well, it isn't immediately obvious or straightforward.
Ultimately, if you start life funded by grants, whether from government or charities, you're setting yourself up for a big risk, because that money can stop and then it's a difficult process to transition. So the answer is not to be too reliant on the government and grant making bodies. Take the money if it is available, but do not rely on it always being available. Make sure you can't just be switched off at the whim of a bureaucrat or a philanthropist and have other funding streams in place.
Of course, there are many new crowd-funding and peer to peer lending providers. But really small regional business are often too small to get attention on these platforms.
Then there's the traditional banking sector, which is commercial. I don't think they have a responsibility to serve the SMEs that do not currently meet their lending criteria. I'd say they're missing an opportunity in not doing so though. Foundation East has successfully lent to businesses that banks' protocols have not allowed them to for 14 years now. There are many Foundation East client success stories, proving that supporting these excluded micro-enterprises and SMEs is worthwhile.
There's an argument that banks ought to want to reach this market through Foundation East. They wouldn't have to invest in the infrastructure to do this micro-lending. They'd just need to provide the funds and we could do it for them. What would they get out of it? A pipeline of readymade, investment-ready clients.
Given your experience as an investor, who do you think would benefit from investing in Foundation East CITR shares and why?
If you've got an instrument where you get a government return through tax breaks and you are helping to fulfil a social need, those are both quite positive things. There's a lot of evidence in the individual and institutional markets that it is becoming more and more important for people to know that if they are investing in something worthwhile, that their money is doing some good and that is an absolutely clear trend. And if you're getting your return from the government, it's predictable and lower risk than other offers.
It's an attractive proposition. Why wouldn't anyone with money to invest and a social conscience invest in Foundation East CITR shares?
Foundation east is looking to provide loans and business support to micro and SME businesses in the east of England with viable business plans.
If you know any, please put them in touch!
Foundation East needs you!
You can help too.Invest in our CITR shares.Help us deliver £15 social and economic impact for every £1 we spend delivering our service. Help yourself to 25% tax relief over 5 years.