Amadeus Capital Partners has won approval to set up an Enterprise Capital Fund (ECF), a UK Government initiative to bridge the £250,000 and £2m equity gap for seed stage technology businesses.
Amadeus will invest £10m into the fund, called Amadeus and Angles Seed Fund (AASF), with the Government contributing £6.5m and an extra £3.5m coming from private investors and business angel groups. Archangel Informal Investments has already committed to joining.
Laurence John, CEO of the Amadeus Mobile Seed Fund, will manage AASF. He said: “We work closely with a number of angel investors; they are an important part of seed financing, especially in our business where the idea is often driven by technology entrepreneurs with little or no business experience. This space is where some of the world’s most disruptive technologies have started and it is a vital part of the UK’s future.” The investment team plans to make up to 10 investments, with follow on financing and support in order to make the companies attractive for series A funding.
AASF is the fourth ECF to be awarded so far, and the Department of Trade & Industry (DTI) plans to establish at least five in this Pathfinder round. In March this year NW Brown was awarded a £25m fund, called the IQ Capital
Fund, which will focus on technology-based SMEs and make investments of up to £1.5m. At the same time E-Synergy, a UK investor and management advisers for high tech companies, established the 21st Century Sustainable Technology Growth Fund, a £30m vehicle targeting sustainable technology.
Alongside the AASF announcement was the unveiling of Seraphim Capital Fund, a £30m generalist angel-based co investment fund led by GLE Group. The fund will typically be investing sums of £600k/£700k throughout the UK alongside lead business angels who will also be investing circa £100k/£300k.
Anthony Clarke, chairman of British Business Angels Association, said: “BBAA has been closely involved with the DTI in the development of the ECF model and we are particularly delighted that there has been such a strong response from business angels to their creation. We believe that this is just the start and that the opportunities for the growth of this type of funding is significant. In the US, business angel funding into small and medium sized enterprises now stands at US$22.3bn during 2005 which is greater than their entire venture capital funding over the same period. There is now a real possibility that the same balance can be achieved here bringing with it all the benefits of ‘mentor capital’ that is an intrinsic part of the business angel investment model.”