The new fund will invest up to £10m per year, investing £250,000 per company at one time, and up to £500,000 over the course of its development. NESTA will also provide mentoring and business support to its investee companies, helping them to attract further funding in future rounds. One of the key aims of the fund is to work in partnership with other investors in developing start-up businesses.
NESTA chief executive, Jonathan Kestenbaum, said: “With the private sector vacating early-stage funding after the dot.com era and the government now shifting its focus to more developed businesses, the UK is facing a potential dearth of investment in this area. Our fund is designed to plug this gap both directly and by demonstrating the viability of early-stage investment to third parties.”
The money will be targeted at UK companies operating in the fields of ICT, healthcare, technology and environmental technology. The businesses should have a target market of at least £100m, be involved in developing innovative technology and own its intellectual property, posses an experienced management team with both technical and commercial expertise, have a clear plan to the next funding round, and a clear exit strategy, which should include a timetable and valuation expectations.
NESTA will also invest in seed or early-stage funds, either as a limited partner or co-investor and will make two or three investments per year from £1m to £3m.
NESTA is a UK Government body set-up in 1999 from a £200m endowment from the National Lottery, charged with supporting talent, innovation and creativity in the UK.