Biggest Innovation Fund loan fully repaid in full
THE biggest single loan handed out by the controversial Jersey Innovation Fund has been paid back in full – two years after the fund was scrapped amid major concerns that public money was being wasted.
Snap Ring Joint received a £500,000 loan from JIF and its founder says the company is now worth significantly more compared to its original value. It is about to list on the Australian stock exchange and is providing revenue and other value to the Jersey economy which far outweighs its original loan, he said.
In 2017, Comptroller and Auditor General Karen McConnell reported that potentially £1.4 million of the loans paid out by JIF may never be recovered. The saga led to major criticism of the JIF board members, politicians with oversight of the fund and senior civil servants.
However, only one company invested in – Logfiller – has gone into liquidation and defaulted on its repayments. Logfiller was loaned £400,000.
SRJ is the second company to fully pay off its loan after Stumpydog Innovations, trading as BabyHub, which has already paid back its loan of £60,000 in full with interest. Its award-winning travel cot is being stocked in major retailers and founder Catherine Curtis has just launched her second product, a bedside crib, which has just won a Paris Design Award this year.
Alexander Wood, chief executive of SRJ, said the company has attracted leading industry figures to both its executive and board, but because of the bad press surrounding JIF, it struggled at times to get local investment.
Proviz was another major recipient of a loan. The company, which designs and sells high-visibility sportswear and accessories, was lent £250,000 in 2015. Co-founder Rupert Langley-Jones said they have never missed a repayment and have been paying interest on the loan which they are on schedule to pay off next September.
Sideplay Entertainment, which develops and distributes instant win games for online gaming operators and lottery organisations, is still paying back its loan. Director Steve Hickson said the business was doing well and employing 14 people in Jersey. It received a £400,000 loan and had promised to create 11 roles in the Island.
The sixth company, Total Solutions Group, which created MediBooks, a billing system for GPs, is also trading successfully according to its founder. Danny Bannister said: ‘The business is complying and up to date with the agreement we have with JIF.’
Aaron Chatterley, co-founder of FeelUnique.com and one of the former JIF board members, said: ‘As an investor in businesses at that stage we would expect 30 to 50% of them to fail, so the failure rate of the innovation fund is exceptionally good.
‘You can’t measure the return and that was never the intention with the Innovation Fund. Returns we were looking for when making loans were not just about the repayment of the loan because that was always going to be only a pre-determined interest rate, it was all about how much employment they were going to generate and the ancillary benefits to the Island. In a way that was more important because we weren’t getting equity in the business so it’s about the longer term benefit to the Island. These businesses have paid tax, they’ve employed people and spent money with other companies and rented property.’
Meanwhile, a spokesman for the government said there are currently no plans for a replacement scheme to support innovation and new businesses.
They declined to comment on individual loans, but Economic Development Minister Lyndon Farnham said: ‘I am delighted to see continued progress and success for Snap Ring Joint. I would like to congratulate the management team and wish them well for the future development of the company.’
A total of £5m was allocated to the JIF scheme by the States, but only just over £2m of that was ever loaned to businesses.
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