A new investment fund designed to plug the “funding gap” for promising small businesses has been launched.

The £10m fund will offer high-growth consumer businesses up to £2m investment and advice from a panel of industry experts, all of whom have invested their own money. The investments are supported by government tax breaks.

Unusually for a private equity model, the scheme will not rely on debt for finance. Instead, the investors plan to generate returns through the growth of the businesses they back, which they expect to be rapid.

The expert panel is chaired by Whitworths chair and former Tetley GB CEO Ken Pringle. Innocent founder Adam Balon, Heinz CFO David Williams and Bacardi UK CEO John Beard are also on the panel.

“There are real opportunities in the market, and great businesses looking for support,” said Tom Lindsay, partner at Spayne Lindsay & Co, the financial services business that has launched the fund.

“We believe this fund would be an attractive investment opportunity in any market, but is more attractive in the current climate, as valuations are low and many businesses are being denied access to other sources of finance. Companies who once would have gone to banks to raise money are now looking for investors.”

Lindsay said the fund was created as smaller companies were often unable to raise funds through finance houses as the cost and time of raising relatively small sums was too high. A fund designed to look for such opportunities plugged this gap, Lindsay said.

“This is different from venture capital in that we’re looking to invest in businesses rather than concepts,” he added. “We’re looking for businesses able to show they’re sustainable and have real turnover, but need capital to get bigger. As this fund is launching in April, companies seeking investment will have had the chance to prove they’re robust in the downturn.”

The fund will accept subscriptions from February.