Virgin boss Sir Richard Branson says Virgin Money could move into business lending to bridge the funding gap between banks and businesses.
On a visit to Tyneside to promote the work of Virgin StartUp, Sir Richard said that business finance for up-and-coming and established entrepreneurs could become part of Virgin Money’s operation.
Figures from the Bank of England last week showed lending to SMEs had dropped £0.8bn on the quarter under the Funding for Lending scheme.
When asked if this posed an opportunity for Virgin Money, Sir Richard told The Journal: “I think it is an opportunity but at the moment we’re getting the bank established for the future. We’ve built the credit card business and we’ve taken on 500 more people in the region.
“In the years to come it will certainly be an area to look at — I’m sure of it. It’s important that entrepreneurs have the means to finance their ideas. So far we’re lucky to have the backing of the government in Virgin StartUp, but it is undoubtedly something to think about for the future.”
Gosforth-based Virgin Money successfully floated on the London Stock Exchange in November 2014, making Sir Richard an estimated £85m with the sale of a 15% stake.
So far the bank has concentrated on domestic products including current accounts, mortgages and credit cards.
Part of the bank’s success was down to the quality of people in the North East, Sir Richard said. He added: “The people in the North East are delightful. They’re enthusiastic, hard working and they know how to party. A company full of Geordies is unbeatable.”
Sir Richard was at Northern Stage in Newcastle with Brian Souter of Stagecoach - partner with Virgin Trains in the new East Coast rail franchise - and iced coffee entrepreneur Jim Cregan, to talk to the region’s business moguls of the future.
Offering wisdom from his own entrepreneurial career, Sir Richard said there are “tons” of great business ideas emanating from other countries, and recommended that aspiring entrepreneurs kept their eyes and ears open to world trends.
He said: “A lot of the best ideas come out of personal frustrations. I was in Puerto Rico one evening trying to get to the Virgin Islands. United Airlines had just announced they had cancelled the flight. I was 28 years-old at the time so I took a bit of a risk and went to the back of the airport and hired a plane. I got a blackboard and wrote $29 one way to the Virgin Islands. I went out to all the other people in the airport who got bumped and filled my first plane.
“Someone remarked if I tightened up the service a bit I might have a future in the airline business. Next day I was ringing Boeing to see if they had any second hand 747s for sale.”
The event, which was packed with students and businesspeople, was also the culmination of the #mentormebranson campaign which saw three budding entrepreneurs win a 30-minute mentoring session with Sir Richard on board Virgin’s new East Coast service back to London.
The winners included North East-based Nick Smith, who runs the Steam Machine Brewing Company, a keg craft beer brewer; Claudia Ladaria and Almudena Vieitez of Bilingual Beats, a concept which teaches English through song; and Yc Ng and Yee Mun Thum, the founders of Scarlett of Soho, a subscription designer glasses service.
North East-based Virgin StartUp loan recipient Simon Coward was also at the event. Together with his business partner the 24 year-old recently launched Iglouu — a frozen yoghurt company.
Mr Coward left his job as a management consultant in London to launch the company. He said: “I always wanted to run my own business and I love Newcastle so it was an obvious choice for me to come back here. The Virgin StartUp money has helped us immensely. We used it for all sorts of things, from buying frozen yoghurt machines to making rent.”
VirginStartup, through regional delivery partner Tedco, offers loans, mentoring and business support to fledgling entrepreneurs in the North East. The not-for-profit company has awarded £3.4m in loans to around 400 businesses.