Merian Chrysalis, the £98.5m investment trust launched last year by veteran small and mid-cap investors Richard Watts and Nick Williamson, has ploughed £5m into fintech firm Growth Street.
Growth Street is focused on lending to small and mid cap British companies, which it says high street banks are no longer doing.
The Chrysalis trust invested £5m of the total £7.5m raised by the business.
Mr Watts, who also runs the Merian UK Mid Cap fund, said: "Growth Street has built a differentiated product that provides flexible funds to SMEs, filling the vacuum created by the retrenchment of high-street banks in this space."
The investment means Chrysalis has now invested 65 per cent of the capital it raised when it came to market through an initial public offering in November.
Chrysalis invests in what it calls later stage unquoted companies. The managers are also permitted to invest up to 10 per cent of the capital of the trust into other investment trusts listed on the UK market.
Growth Street co-founder Greg Carter said: "New regulations and technologies are driving rapid change within business lending. In a short period we have proven that ambitious businesses can thrive with GrowthLine.
"We are now working to expand access to GrowthLine and strike new relationships throughout the financial services ecosystem."