Member Article

Sheffield business bank invests £25 million in venture capital fund

Sheffield-based British Business Bank has led the successful financing of the first in a new class of Enterprise Capital Funds (ECFs), contributing a £25 million investment to IQ Capital Fund 2, which is worth a total of £42 million.

The new fund, also supported by £17 million of private backing, will be able to make individual investments of up to £5 m into portfolio companies, well above the previous limit of £2 million.

IQ Capital Fund 1 was founded in 2006 and managed the first £25 million 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 £570 million.

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”

This was posted in Bdaily's Members' News section by Clare Burnett .