Enterprise Capital Funds: The lowdown

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Enterprise Capital Funds: The lowdown

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In this year's Budget Alistair Darling announced a number of measures that would help small business. In particular there was to be more funding available through a variety of schemes such as the Small Firms Loan Guarantee Scheme and the Enterprise Capital Funds (ECF).

But what are Enterprise Capital Funds and how can small business get their hands on the cash?

Enterprise Capital Funds combine Government and private sector money to help bridge the equity gap faced by small and medium sized businesses (SMEs). Many businesses with genuine potential fail when they need extra money to expand. This has been identified as the "equity gap". The equity gap is seen as the point where the cash injection needed for the next step is too small to interest most venture capitalists but too big for friends and family to help out.

Enterprise Capital Funds were created to bridge that gap and allow SMEs to fully capitalise on their potential and growth opportunities.

Each ECF is a privately managed fund, established specifically as an ECF, for the purpose of investing equity capital in SMEs affected by the equity gap. The funds are chosen through a competitive process where private funds apply for the Government funding and ECF status.

According to the Department of Business Enterprise and Regulatory Reform (BERR) who run the ECF program there are 6 ECF Funds.

The IQ Capital Fund

The IQ Capital Fund focuses on early stage companies in high technology sectors (including ICT, Life Sciences and Clean Tech), but will also invest in more mature and fast growing companies in traditional sectors. It can initially invest between £250,000 and £1 million in predominantly UK-based technology companies (£1.5 million for later-stage and non-tech companies). Follow on rounds can bring the total invested by the fund to £2.5 million.

21st Century Sustainable Technology Growth Fund (STF) This fund operates across the UK and focuses on high growth companies employing leading edge sustainable technology seeking between £500,000 and £2 million. The fund has close links with the UK's research community and expertise in selecting and backing strong technology in early-stage companies. A minimum of 50% of the Fund must be invested in companies developing Sustainable Technology.

Seraphim Capital

Seraphim Capital Fund's primary focus is on UK focused companies looking for equity capital of between £500,000 and £2 million. The Fund's unique strength is its network of private investors, a national group consisting of some of the UK's most successful and influential business leaders. These are typically CEOs, Chairmen, non-exec directors and successful entrepreneurs who are re-cycling returns from their own enterprises. Successful investors also benefit from their expertise.

The Amadeus Enterprise Fund

The Amadeus Enterprise Fund or Amadeus & Angels seed fund is it's also know is interested in companies that offer a novel technology - "a great leap forward, not just a new wrinkle". They are keen to help businesses who have perhaps not been able to devote time and energy to investigating how best to exploit the advantages of their proprietary technology. They look for entrepreneurial management with global ambitions and a defendable competitive advantage. In return they offer more than just capital but support, experience and a network of contacts in the UK and beyond.

The Catapult Growth Fund

The Catapult Growth Fund specialises in providing Equity Capital for businesses requiring between £500,000 and £2m. They are focused on providing early-stage finance through to development capital for businesses in innovative growth sectors including technology, healthcare, medical devices, environment and support services. Catapult has extensive experience of working with growing businesses and seeks to add value to the companies they invest in through the introduction of experienced and relevant non-executive directors to the company board.

Dawn Capital ECF

Dawn Capital ECF backs great teams in technology-driven companies that are seeking to create new markets or revolutionise existing ones and are looking to raise between £100,000 and £2 million. The Dawn Capital ECF focuses on traditional industries where pioneering companies are using technology to provide innovative products and services and generate jobs and wealth. These sectors include Healthcare, Media, Financial Services, Mobile Services, Business Process Outsourcing, and Molecular Science. We have also invested in those companies creating the technologies and software that are driving this process.

With more money pledged to the ECF scheme to bridge the so called equity gap it's worth keeping in touch with changes by visiting www.berr.gov.uk for updates and new ECF Funds.