A venture capital co-investment fund launched to assist new businesses in the West Midlands maximise their growth potential has been named in the top ten most active in the UK.
The £8 million Advantage Early Growth Fund (AEGF), which employs just three full time staff, has emerged as equal eighth best performer in a list of the top ten institutional investors in UK venture backed companies in a report issued by Cambridge-based Library House, a corporate intelligence organisation.
The report reveals that in 2006 AEGF - which is part of the Advantage West Midlands' Access To Finance initiative - figured in 14 investments totalling £1,463,000. In 2005 its ranking was 13th equal. The Fund also came out fifth best performing public sector investor up from its 2005 placing of eighth equal.
AEGF's performance comes in the wake of its 4th Annual Investee Company Conference at Lea Marston Hotel, near Sutton Coldfield.
The conference featured a series of presentations from the companies and provided a wide range of networking opportunities. AEGF, which averages one new investment a month, has now made 60 investments in 40 companies since its February 2003 launch. The total investment by the Fund has reached £4.8 million, matched by £13 million from private investors plus £5.8 million in bank loans - a total of £23.6 million in extra funding.
Patrick Palmer, head of Access To Finance at AWM, said: "One of the agency's key priorities is to develop a diverse and dynamic business base and ensure that businesses have access to the finance needed to set up and flourish.
"The Advantage Early Growth Fund is leading the way in addressing funding gaps for early stage businesses and investing in enterprising and innovative SMEs across the region. The Library House report is ample evidence that AEGF is providing an excellent service." Peter Brown, director of AEGF, said: "As far as we are concerned being named as the eighth most active fund is a fantastic endorsement of the radical approach we have brought to the venture capital industry.
"All those funds that have made more investments than us will usually have between 15 and 30 staff, often more. Of course we are only making small investments and they are often making large ones so the amount invested is very low in comparison but that is why the Fund was set up; to fill a gap at the bottom end of the VC market where no one else had found a way to make small investments effectively.
"We have over 400 individuals who have co-invested with us; some have invested in as many as nine different companies alongside us. We are planning to invest at the same rate until the end of 2008."
AEGF makes between 10 and 20 investments a year, ranging from £10,000 to £100,000 - and averaging £80,000.
In every case it must invest alongside investors from the private sector on the same terms. The private investor can invest more than the Fund, so long as it pays the same price per share, so total equity investment can be as much as £250,000.
Usually, the private sector investor will be business angels or a syndicate of small private investors but they may also be companies or another private sector fund.
