The FSE Group has launched the Future London Growth Fund, a debt vehicle that plans to lend more than £70m to high-growth small businesses across all 32 London boroughs and the City, according to Tech Funding News. The fund aims to support between 40 and 50 companies.

The British Business Bank (BBB) has committed £20m as cornerstone investor. The other main commitment comes from GLIF Limited, the investment arm of the Mayor of London, through Funding London as part of the London Growth Plan. Loans will range from £1m to £3m, a bracket that sits between conventional bank financing and larger venture debt cheques. Kala Desai, head of the fund at FSE, said the vehicle plans to lend £70m in total and will recycle repaid capital into further loans.

FSE is targeting innovative businesses that have already demonstrated commercial traction, generally in the form of revenue, but may not yet be profitable. "Our typical borrowers are innovative, high-growth businesses which have already demonstrated strong commercial performance, generally in the form of revenue, and are now looking for financing in order to reach the next phase of their growth," Desai said. The portfolio will not be concentrated in a single technology sector, with healthcare, education, transport, data, enterprise software, advanced manufacturing and sustainability all named as target areas.

The fund extends an existing relationship. FSE has run the debt component of Funding London's Greater London Investment Fund since 2019; that earlier £66m debt fund backed fast-growing companies across boroughs including Hackney, Hounslow, Brent, Lambeth, Wandsworth and Westminster. FSE has invested in more than 100 London businesses to date, including edtech platform Springpod and transport AI company VivaCity.

"Smaller businesses operating in underserved communities, or those without established investor networks, can still struggle to secure the growth capital they need to scale," said Adam Kelly, managing director of Debt and Regional Funds at the BBB. "Our £20 million cornerstone commitment to the Future London Growth Fund will help address that gap."

The commitment adds to a run of BBB-backed regional and thematic debt programmes, including a £100m aerospace debt fund, £180m across six AI funds and £90m across 10 microfunds. Desai framed the market gap in credit-underwriting terms: traditional lenders tend to assess businesses on historic financial performance rather than forward growth, which penalises companies reinvesting revenue ahead of profitability.

For the UK lower end of the private credit market, the fund illustrates how public capital continues to anchor lending to pre-profit growth companies that fall outside both bank credit boxes and the minimum ticket sizes of institutional direct lenders. The pace at which the £70m is deployed, and the credit performance of borrowers lent to on growth plans rather than trailing earnings, will determine whether the model can attract more private institutional capital alongside public anchors.