Avanti and E-Capital join forces

Early stage tech investors, E-Capital Investments and Avanti Partners (formerly Internet Incubator) have announced a proposed merger of the two companies in an effort to survive the current turmoil in the market. Until recently both E-Capital and Avanti were specialised investment firms focusing on early stage companies in the technology and Internet sectors in Europe and North America.

Following difficulties securing further funding, the boards of both firms have agreed to pursue alternative strategies. Subsequently, the new entity will de-emphasise its activities abroad. Avanti has closed all international offices, including its San Francisco base. President Hervé Pluche is actively working on the dissolution of Avanti Partners Inc, which should be finalised by the end of the year. Pluche is actively looking for new business opportunities outside the company and intends to remain involved in ventures in the Bay area. He said: “Due to the current economic environment, we have had to adapt our investment model. The market has little appetite for seed stage investments and it has been difficult to raise further funds.”

The new combined entity has a portfolio of around 17 companies and will focus on identifying and investing in undervalued or distressed businesses in the UK. Combined funds available for investment are slightly less than £19 million. The funds will be used to support the existing portfolio and also to make new investments. Pluche said: “To reduce risk through diversification the business needs a portfolio of at least 20 companies.”

He added that the new entity has no plans to go out for further fund raising in the short term as there is no indication that LPs and VCs will return to an active mode of investing. “LPs are not putting pressure on the VCs to invest – today they are risk-averse. If anything, they are telling the VCs to be cautious,” he said.