Finance Tree, a North East England specialist finance adviser, has been instrumental in helping to launch a new fund which plans to invest over €20m, over the next five years, in 75-100 companies in the UK seeking seed funding.
Finance Tree developed a winning bid for this funding through its work on the ACHIEVE MORE project, which has been supported by the European Commission’s DG Enterprise and Entrepreneurship. ACHIEVE MORE evaluated the variety of funding mechanisms used around the world and developed an approach that is fast, cost efficient, and rigorous in its selection of entrepreneurial ventures ho deserve funding to get them to early market revenues.
The fund has received €8.5m from the European Investment Bank, European Regional Development Funds and One North East, the regional development agency for the North East of England. It will multiply this money by bringing in an additional €11m from Angel Investors across the UK. On average the angel funds will be x1.25 those invested from the JEREMIE funds. The total funds are therefore likely to equal or exceed €20m.
The fund will be managed by Rivers Capital Partners, a joint venture between FinanceTree and E-Synergy, who are to develop angel networks in the North East of England and elsewhere. FinanceTree is itself a specialist early stage corporate finance and venture capital training company and E-Synergy is venture capital business with funds in London, the Midlands and Northern Ireland.
This integrated triangle of expertise has already started work in sifting through applications from companies seeking seed funding. So far 25 companies are in the evaluation process, and it is expected that around 10-15 of these will be funded by the end of 2010. This is a far higher ratio than investors would normally expect to see as viable for investment. The secret ingredient here is the toolkit developed in ACHIEVE MORE, which both evaluates ventures quicker, in this case they expect to reach a decision in as little as 6-10 weeks. The process also prepares the companies seeking seed funding by giving their management teams greater business acumen, through a programme of business incubation and mentoring from seasoned business coaches, making them more likely to succeed and more attractive to would be investors.
Having been rewarded with one substantial amount of money the Finance Tree based team are now focusing on further approaches to the JEREMIE funding programme, and are confident that over the next few years their approach will attract significant additional funds.