Can Private Equity solve the funding gap?

The equity funding gap remains a huge problem for SMEs.
There seem to be two gaps. The first is for businesses raising between £500,000 and £2 million of equity where below this threshold there is a healthy market of Angel and Crowd investors for businesses to approach, but for some reason
Private Equity is focusing on much larger investments, normally above £2m.
The second gap is for businesses wishing to invest in R&D or marketing where it seems that Private Equity finance has become more like debt finance, focusing mainly on profitable businesses.
So if you had, say, a chain of five restaurants with a proven business model you would have no shortage of funds for the next five. If, on the other hand, you wanted to grow from one to two or three you would have a problem.
Despite the rhetoric from Government, banks and many others about the need to support SMEs if economic growth is to be restored to pre-2008 crisis levels, the incentives aren’t working.
With appropriate government incentives, we believe that PE firms could be encouraged to fund the equity gap.