FSE Group launches £70m-plus London growth fund for underserved scaleups
The Future London Growth Fund, backed by the British Business Bank and the Mayor's investment arm, will offer £1m to £3m loans to scaleups across London's 32 boroughs.
New debt fund targets London’s scaleup gap
The FSE Group has launched the Future London Growth Fund, a debt fund aimed at supporting scale-up businesses across London’s 32 boroughs and the City of London. The Fund expects to deliver more than £70 million of lending, with cornerstone commitments from the British Business Bank and Funding London, the Mayor of London’s investment arm.
Funding London has invested through its investment entity, GLIF Limited, as part of the Mayor’s London Growth Plan. The British Business Bank’s commitment to the Fund stands at £20 million.
How the loans work
The Fund will offer loans ranging from £1 million to £3 million, designed to bridge the gap between traditional bank finance and larger-scale venture debt. It is intended for companies that already show strong commercial traction and have credible plans to scale, but which may be overlooked by traditional finance providers.
FSE points to research from the British Business Bank showing that entrepreneurs in economically deprived urban areas can face extra barriers to finance and business success, even when based close to established investment ecosystems. The same report found London to be the toughest place in the UK to be an entrepreneur, with 71 per cent of business owners there reporting a profit, against a UK average of 84 per cent.
FSE’s track record in London
FSE has managed the £66 million debt portion of Funding London’s Greater London Investment Fund since 2019, giving it an existing base of relationships with London scaleups. The firm also manages parts of the British Business Bank’s South West Investment Fund, Investment Fund for Scotland and Midlands Engine Investment Fund, and was recently appointed manager of the South East Investment Fund (Debt).
Mayor of London Sadiq Khan said London is “the best city in the world to start and grow a business” but that many firms “are overlooked by traditional finance providers”, adding that the Fund would help businesses “innovate and expand” with “lasting economic impact”.
FSE chief executive Julie Silvester said the Fund continues the firm’s approach of “flexible, relationship-led capital”, giving management teams “the freedom to innovate and create high-quality jobs”.
Adam Kelly, managing director of debt and regional funds at the British Business Bank, said it is easy to assume London businesses have access to all the finance they need, but that this is not the reality for many ambitious founders, particularly those in underserved communities or without established investor networks.
What it means
For UK founders, the Fund adds a dedicated growth-debt option sized for companies too large for standard bank loans but not yet ready for, or interested in, large venture debt facilities. It also extends the British Business Bank’s regional fund network, which already covers the South West, Scotland, the Midlands and the South East, into London itself with a specific focus on underserved parts of the capital.
What to watch next
Attention will now turn to which London scaleups draw down the first loans from the Fund, and whether the £70 million target is reached or expanded as demand becomes clear. The Fund’s performance will also be watched as a test case for whether debt finance, rather than equity, can help close London’s growth-finance gap for founders outside established investor networks.