1st ECF out of the gates

IQ Capital is the first fund manager to be awarded funds under the UK government-sponsored Enterprise Capital Fund (ECF) initiative. It has been awarded £16.7m, having been able to raise £8.3m from its members (the scheme pays on a 2:1 basis up to a maximum of £25m) bringing the total funds available for investment to £25m.

IQ Capital has been launched by a partnership of three of the UK’s leading angel networks: OION, GEIF in Cambridge and SWAIN based in Bristol (see notes), with fund management provided by Cambridge based NW Brown Group, and it will focus on seed and early stage companies in high tech as well as more traditional sectors.

The ECF scheme (currently in its pathfinder stage in the UK) is being closely watched by other EU countries, having passed muster under EU state aid rules back in May 2005. The UK DTI (Department of Trade & Industry) hopes to launch a rolling programme with new ECFs coming on stream every 18 months or so in order to diversify the government’s exposure by vintage year. Terms are particularly attractive, being on circa 4% loan basis with the upside being left with the fund manager and its private investors.