Early Growth Fund gets off the ground

At an event held on Tuesday 21 November 2006, a new £5million venture capital fund was launched by East Midlands Development Agency (emda) and E-Synergy Limited.  

Aimed at helping the region’s start-up and early stage businesses, the East Midlands Early Growth Fund will address the ‘equity gap’ which restricts young businesses from accessing growth funding.  Specifically, it will concentrate on the lower levels of the equity gap, for businesses seeking between £20,000 and £200,000 of finance.

The event, which took place in the ‘VIEW from the Top’ gallery at the Waterstone’s bookstore in Nottingham, attracted over eighty people.  This included representatives from small businesses, solicitors, accountants, and intermediaries such as intellectual property specialists.  

In his speech, Jeff Moore, emda Chief Executive, highlighted the importance of the Fund, and explained how it fits in with the wider family of access to finance initiatives:  “emda’s approach to improving access to equity finance is to put in place an ‘escalator of funds’ that can support the creation and development of high growth businesses in the region.  To date, around £80million of new risk capital has been made available to the region’s SMEs since 2002, thanks to emda, central Government and our partners.”

He added:  “The start-up and early stage companies assisted by the new Fund will hopefully grow into successful, world beating businesses employing skilled people and developing and delivering world class products and services – exactly the type of innovation led businesses that we need in the East Midlands if we are to compete in the global marketplace.  I’d like to warmly welcome E-Synergy to the East Midlands as a valuable addition to the East Midlands finance family and I wish them every success with the Fund.”

In September 2006, E-Synergy Limited was identified as the preferred Fund Manager following a competitive tender process and approval of the Fund by emda’s Board in December 2005.  With a proven track record in the ‘equity gap’ market, E-Synergy already manage a £5million Early Growth Fund for the Department of Trade and Industry’s Small Business Service.  It has also been selected as one of the first of the Enterprise Capital Funds, with E-Synergy set to manage a national £30million Sustainable Technology Fund which will focus on high growth companies employing leading edge sustainable technology.

Andrew Stevenson, Chief Executive of E-Synergy Limited, told delegates at the event that he was delighted to be involved in the delivery of such an exciting initiative:  “Early Growth Funds are very much at the cutting edge of the difficult process of trying to get new businesses off the ground and on to a viable growth path.  E-Synergy brings several years experience to this, but we know that there is no magic formula for success since the life of early stage companies is unpredictable.  We must ensure a flexible and persistent approach.”

He continued:  “All at E-Synergy have been extremely impressed with the vibrant nature of the region, the quality of opportunities on the horizon and the good level of communication between the various players on the scene.  We’re keen to show results and our aim is to build a successful portfolio of growing profitable businesses over a ten year period, with investment in 70 SMEs taking place over a five to six year period.”

To receive investment, each business must have less than 50 employees and needs to be either a start-up or early stage business.  A start-up business is one that has been trading for less than 12 months, or has been trading for less than three years with a turnover below £100,000 per annum.   An early-stage business is one that has been trading for between 12 months and three years. 

The Fund will invest up to £200k in start-up businesses (in two stages of £100k) and somewhat less in early-stage businesses, to give a boost to specific projects such as sales and marketing. 

It will invest alongside private investors, and will work closely with members of Growth Investment Network East Midlands (GINEM).  Every £1 invested by the Fund must be matched by at least £1 from private investor.  This will help attract a further £5million of private investment into small businesses in the region creating a total investment fund of £10million.  The Fund will work closely with Connect Midlands and Catapult Venture Managers (see notes to editors). 

 To find out more about the East Midlands Early Growth Fund and how to apply, contact Sarah Guy at E-Synergy on 020 7583 3503 or s.guy@e-synergy.com or visit www.earlygrowthfund-em.co.uk.