GATEWAY E PROJECT Access to Finance Pan London - Evaluation Summary

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					Public Item 2.2, Appendix 12
Corporate PMO

PROJECT:

Access to Finance Pan London - Evaluation Summary

GATEWAY E

Project Number: 19365 Project Manager: Annie Krikorian Start/End date: May 06/ September 08 Report date: October 2008
Note: This project was evaluated as part of the Impact
Total Project Cost Gross LDA Investment Net LDA Investment Other Public/Private Investment

Programme: PROG 29 Targeted start-up and finance support Athena Report Ref: 2383836 Report author: SQW Consulting

Evaluation of four Access to Finance projects.

Value for Money (VfM)
£2,133,719 £1,713,229 £1,713,229 £420,490

Impact Findings
Strengths
• Good return on LDA investment - however, it should be noted that there is a relatively wide margin of error in the return for investment calculation because of a low response rate in the beneficiary survey. • Good economic performance against output (activity) unit cost benchmarks • Good efficiency performance against net outcome unit cost and GVA uplift figures benchmarks. • Project partially achieved all its objectives: information provision, advice, networking; raise awareness amongst finance providers of alternative sources of finance; assist companies obtain finance; • Good achievement of equalities targets. • Just over a third of respondents submitted a funding application as a result of the support received with a 72% success rate and over 80% of this group attributing their success to the project. A total of £6,578,000 was raised by 116 (18%) of beneficiaries.

Context and Rationale

London is a major business location but SME experience difficulties accessing finance due to lack of awareness of what is available and lack of understanding as to how to prepare and present attractive funding applications.

EDS Objectives

Address barriers to startup, growth and competitiveness.

Impacts

Theory of change
LDA can help address information failures & asymmetries in SME access to finance. It can also deal with coordination failures (in business support) and equity failures (deprived groups and areas).

Year-on-year growth rates of start up. Increase in number of VAT registered businesses per 10,000 population and increased survival rates for early stage businesses. LABS data demonstrates improved rates of SME access to finance.

Key Gross Outputs
(May 2006 – March 2008)

Total Achieved (Target) Variance

BAME Achieved (Target) Variance

Women Achieved (Target) Variance

Disability Achieved (Target) Variance

LDA Unit Cost £

Business support (Introduct ory) Skills (Intensive support)

651 (688) -5% 397 (525) -24%

418 (206) +103% 251 (158) +59%

241 (206) +17% 135 (158) -15%

38 (34) +12%

405

22 (26) -15%

2,510

Weaknesses

Outcomes
Assisted businesses experiencing improved supply of finance and improving performance (e.g. increased profitability). Increased satisfaction with business support. Finance providers more willing to supply finance (due to improved quality of applications).

Outcomes (survey evidence)
Total full time employees generated (jobs created)

Net
1302

Net outcome unit cost (£)
890

Inputs (to March 08)

Total: £1.5m LDA: £1.2m, City of London Corp: £100k Other private: £246k

*Important caveat - VfM figures indicative only: wide margin of error (21.6%) attached to the survey results that form the basis of all VfM & CBR calculations due to low survey response rate (20 out of 651 total business beneficiaries) Total GVA (all funding): £28.8m; GVA attributable to LDA: £26.5m GVA uplift for every LDA £1 invested: £25* Cost-Benefit Ratio (LDA): 20.5* Return on investment rating against benchmarks: Very Poor Poor Average Good <0.5 0.5-1.0 1.0-2.0 2.0-5.0

Activities

Lessons Learnt

• Perceived lack of impact on beneficiary businesses for those that received introductory only support compared with those reported by recipients of the intensive phase of support. This lack of impact is not borne out by the analysis of net outcomes. • Project perceived by beneficiaries to be weak in introductions to finance providers. • Very limited Strategic Added Value outcomes other than leverage. • Need to ensure the maintenance of up to date beneficiary contact details for monitoring and evaluation purposes.

Publicly funded business support intended to raise financial awareness and capacity to access finance (in particular from private sector) across London, excluding the Objective 2 areas. Support includes an introductory diagnostic phase followed by 5 days of intensive support.

What worked well?
• Substantial amount of private sector leverage (£2 raised for every £1 invested by LDA) but the agency could do more to support sustainability of the model such as building capacity amongst delivery providers to view beneficiaries as ongoing clients that can be provided with follow-up support, particularly since beneficiaries stressed the importance of the mentoring and coaching elements of support. • Important to establish a clear baseline at the start to establish a clear picture of need and demand with respect to type of business, equalities groups and geographical characteristics.

Outputs
No. of diagnostics (business support) and completed projects (skills). Sums of finance raised.

Excellent >5.0

*
* Due to the unreliability of the survey findings the return on the investment has been rated as ‘good’ rather than ‘excellent’

What worked less well?

Was there a focus on market failure?
• Yes – asymmetric information

Public Item 2.2, Appendix 12, page 1 of 2

Corporate PMO

PROJECT:

Access to Finance Pan London - Evaluation Summary

GATEWAY E

How should the LDA take these findings forward? Project Manager’s comments:
What would the LDA do more of? 1. Look to provide additional mentoring for start-up businesses after they borrow 2. Place greater emphasis on successful finance raising – this is being incorporated in the new project 3. Greater emphasis on transferring knowledge to clients rather than simply preparing finance applications on their behalf 4. Introductory workshops to enable clients to understand their options better at the outset. 5. What would the LDA do less of?

Corporate PMO comments:
What would the LDA do more of? What would the LDA do less of? Need to improve LDA and project management information systems to ensure that core project information e.g. beneficiary contact details, funding applications etc. are as accurate and accessible as possible to enable a robust and representative impact evaluation process and report

Corporate PMO comments: required before starting the project to assess the 1. Thorough baselining exercise
degree of market failure and need pan-London compared to access to finance problems experienced in significantly deprived areas.

2. Need to build greater capacity amongst delivery providers and encourage them to view beneficiaries as ongoing clients to try and ensure greater sustainability of support as public sector funding comes to an end. 3. To complement the above increase in mentoring for beneficiaries the report also suggests that greater involvement by the financial community in the LDA’s access to finance work, potentially through a regional finance forum (as used in other regions) would help facilitate effective introductions between the beneficiaries and finance providers, adding greater strategic value to the project. 4. 5. Dissemination of lessons learnt tracker
Investment Programme Board Investment Committee GMT Design, Development and Environment & Jobs, Skills and Youth Economic Analysis Strategy Audit, Risk & Performance GLA BERR

Public Item 2.2, Appendix 12, page 2 of 2


				
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