The new Government backed Venture Capital Startup Fund and the rise of Tech City

April 15, 2013

Government cash injection

The Mayor of London, Boris Johnson has announced a £22million equity fund designed to help small and medium sized businesses (“SMEs”) in the capital. It is hoped the fund will help both create and safeguard over 400 jobs.

The Fund is part financed by the London European Regional Development Fund, and SME Wholesale Finance, a London-based redevelopment body. Described by the Mayor as “win-win”, the Fund will invest in fast growing businesses and use the returns on investment to fund further businesses.

The venture capital fund tender was awarded to MMC Ventures, one of the most active venture capital investors in the £0.5m- £2m equity gap market, specialising in fast-growth early-stage businesses, with a focus on the technology-enabled sectors, in particularly financial and business services, business software, digital media and e-commerce.

To date the fund has already invested in various London SME’s, including; Masabi, which provides mobile ticketing solutions to travel operators; LoveHomeSwap, an international holiday home exchange website; MBA & Company, which provides both corporate and SMEs with instant access to high-end advisory and research work; and Somo, a mobile marketing company.

Will your business benefit?

It is known that SMEs in the capital often struggle to gain access to finance- this being a key barrier to growth. The MMC London Fund will therefore provide funding in the early stages, with particular focus on software for financial services; creative industries; the “digital economy”; leisure; education; and healthcare.

Tech businesses are particularly prevalent in Central and East London, which has been dubbed Tech City or Silicon Roundabout, and which houses technology giants such as Facebook, Google, Intel, and Vodafone, as well as more than 500 SME’s. Providing funding to SME’s in this area will therefore take London a step closer to becoming a serious contender in the global tech investment rankings, and Ministers hope Tech City will soon rival the success of Silicon Valley in California.

Boris Johnson recently said that “London's small to medium companies are a vital component of this city's economy, supporting significant numbers of jobs. It is a top priority for me that these entrepreneurial enterprises receive practical support to thrive and grow, not least as many have the potential to become major employers in the future. This innovative equity fund is using public and private money in order to offer much needed financing when more traditional routes are not available”.

In order to qualify for funding, the portfolio of applicant companies must meet certain equality and sustainability objectives, and be from a cross section of SME’s throughout London’s 33 boroughs. A portion of the fund will also focus on the more deprived boroughs including Hackney and Tower Hamlets.

Thinking of starting up?

As well as having to overcome the hurdle of raising capital to facilitate the growth of a business, the legal aspects of starting up can be a minefield. Fox Williams has clients from a variety of industry sectors, including technology and online, financial services, travel, logistics and distribution, natural resources, healthcare, media and fashion. The firm’s involvement in these industries gives it specialist knowledge and in-depth market intelligence. The Fox Williams Startup Group is a full service team, and so is able to draw on its specialist expertise in areas such as tax, employment, real estate, technology, intellectual property, tax and incentives, all of which are vital areas for businesses to consider when starting up.

Related pages:

Business Start Ups more

Corporate more

Private Equity and Venture Capital more

Private Equity and Venture Capital more

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