British Business Bank Leads Financing Of First ‘Super-ECF’
£42m IQ Capital Fund Can Invest More Than Double Previous Limit In Growth Companies
The British Business Bank has led the successful financing of the first in an enhanced class of Enterprise Capital Funds (ECFs), contributing a £25m investment to IQ Capital Fund 2, worth a total of £42m.
The new fund, also supported by £17m of private backing, will be able to make individual investments of up to £5m into portfolio companies, well above the previous limit of £2m.
IQ Capital Fund 1 was founded in 2006 and managed the first £25m ECF awarded that year. Portfolio companies from that fund exited to Google, Apple and Huawei among others.
IQ Capital Fund 2 will focus on early stage companies with high-growth potential, in the technology and B2B sectors. It will invest only in partnership with an ‘IQ Angel’, an angel investor who is an expert in a company’s specific sector and with in-depth experience of growing and exiting a successful business.
The fund is the 17th ECF to be created, bringing the total investment capability of the programme to over £570m.
There is a rolling investment programme for commitments to new Enterprise Capital Funds by the British Business Bank, which expects to invest in 2 to 3 new funds per year.
Keith Morgan, CEO, British Business Bank, comments:
“The creation of this fund is an important landmark in the development of the ECF programme into one which meets the market demand for greater availability of growth and equity capital.
“We amended the ECF guidelines earlier this year so we could work with private sector providers to offer larger capital injections to growing businesses. Funds such as this will play a central role in closing the equity gap faced by some early-stage businesses at a vitally important stage in their development.”
Max Bautin, partner IQ Capital, comments:
“The higher round size limit enabled by the British Business Bank will allow IQ Capital Fund 2 to target larger investments into technology businesses with the ability to become world-class leaders in their sectors.
“IQ Capital Fund 2 will continue with the simple, yet highly effective, investment strategy demonstrated in its predecessor fund, focusing on the best UK early stage and growth capital technology deals and adding value to them through its partnership with the most experienced class of sector-specific, successful angel investor.”
NOTES TO EDITORS
About British Business Bank
The British Business Bank makes finance markets for smaller businesses work better, enabling the sector to prosper, grow and build economic activity.
Its objectives are to:
- increase the supply of finance available to smaller businesses where markets don’t work well.
- create a more diverse and vibrant finance market for smaller businesses, with a greater choice of options and providers.
- build confidence in the market by increasing smaller businesses’ understanding of the options available to them.
- achieve this whilst managing taxpayer resources efficiently and within a robust risk management framework.
British Business Bank plc is a public limited company registered in England and Wales registration number 08616013, registered office at Foundry House, 3 Millsands, Sheffield, S3 8NH. As the holding company of the group operating under the trading name of British Business Bank, it is a development bank wholly owned by HM Government which is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). British Business Bank operates under its own brand name through a number of subsidiaries, one of which is authorised and regulated by the FCA.
British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such.
A complete legal structure chart for British Business Bank plc and its subsidiaries can be found at www.british-business-bank.co.uk .
About IQ Capital Partners
IQ Capital Partners is an Early Growth Venture Capital firm established to address certain imbalances in the traditional European venture capital model, and focuses on creating a strong and effective collaboration with CEOs and other investors.
Our approach creates a solid collaboration with founders and other investors through the model of investing alongside sector experts and entrepreneurs – ‘ IQ Angels’ – who have previously managed and achieved significant exit success with innovative technology companies. These IQ Angels, endorsed by the portfolio companies, work in partnership with IQ Capital Partners and the company founders to provide connections and constructive strategic advice throughout the various growth phase hurdles and to provide a great sounding board for CEOs through open discussion and sharing of their previous experiences.
The fund invests between £1-5m in innovative, fast-growing technology and B2B companies, including SaaS and PaaS, IoT, digital media, enterprise software, robotics and med-tech. The team, Max Bautin, Ed Stacey and Kerry Baldwin, has delivered significant returns to investors since 1997, including Autonomy (IPO), Sirigen (BD), Phonetic Arts (Google), KVS (Veritas), JCP (Sun), 365Corp (IPO) and WhereonEarth (Yahoo) and draws upon a diverse range of investment experience to generate excellent returns to investors.
We are always open to building relationships with new ‘IQ Angels’ who have a deep understanding of a specific technology sector, gained through the experience of growing and exiting successful businesses in that sector, who are prepared to invest in early growth technology companies, and also prepared to take an active role and a collaborative approach. IQ Capital invests across the UK and has offices located in Cambridge and London.
About Enterprise Capital Funds
Enterprise Capital Funds are commercially focused funds that bring together private and public money to make equity investments in high growth businesses.
The programme invests into funds on terms that improve the outcome for private investors when those funds are successful.
These investments encourage venture capital funds to operate in a part of the market where smaller businesses are not able to access the growth capital they need.
Enterprise Capital Funds are managed by experienced investors from a variety of backgrounds – including teams from the venture capital industry as well as serial entrepreneurs with a history of success in building early stage UK companies.
There is a rolling investment programme for commitments to new Enterprise Capital Funds. The process is competitive, and BBB expects to invest into 2 to 3 new funds every year. British Business Bank-supported funds that are currently investing into new prospects are:
- Panoramic ECF 1 – Panoramic Growth Equity
- Passion Capital ECF – Passion Capital
- Notion Capital Fund 2 – Notion Capital
- Longwall Ventures ECF – Longwall Ventures
- Amadeus IV Early Stage Fund ECF – Amadeus Capital Partners
- Episode 1 ECF – Episode 1
- Foresight Nottingham Fund – Foresight Group
- Regents Park Partners II ECF LP – Sussex Place Ventures
British Business Bank also works with the following funds, currently investing into new prospects:
- Mercia Fund 1 – Mercia Fund Management
- Early Advantage Limited Partnership – Midven
- The Exceed Midlands Advantage Fund – Midven
- South East Seed Fund – FSE Fund Managers
- £155m North West Fund – North West Business Finance Limited
- £125m Finance for Business Norther East – various fund managers
- £90m available for investment, Finance Yorkshire – various fund managers