E-Synergy appointed to drive equity gap funding

07 September 2006

East Midlands Development Agency (emda) has today appointed E-Synergy Limited to manage a new £5million venture capital fund for the region’s start-up and early stage businesses.

emda’s board approved the fund in December 2005 and following a competitive tender process, E-Synergy Limited has been identified as the preferred fund manager. 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 (DTI’s) Small Business Service and the Secretary of State, Alan Johnson, recently announced that E-Synergy’s £30m Sustainable Technology Fund has been selected as one of the first of the Enterprise Capital Funds.

E-Synergy’s particular expertise comes in providing finance and support to innovative and technology-based small businesses. It also has access to a strong group of investors and funds across the UK - crucial in attracting additional start-up and early stage business funding from the South East and London to the East Midlands.

The aim of emda’s new venture capital fund is to help address the ‘equity gap’ which restricts young businesses from accessing growth funding of up to £2million, the level above which private sector venture capital funds typically start to operate. Specifically, it will concentrate on the very lower levels of the equity gap, for businesses seeking between £20,000 and £200,000 of finance.

The fund will invest alongside private investors known as Business Angels, 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 a Business Angel. This will help attract a further £5 million of private investment into small businesses in the region creating a total investment fund of £10 million.

Jeff Moore, emda’s Chief Executive, said: "We estimate that at least 70 businesses from across the East Midlands will benefit from the fund over the next six years. For the region’s entrepreneurs and owners of small businesses, this is excellent news. It demonstrates our commitment to removing barriers to growth by providing carefully targeted funding assistance – a key challenge outlined in the new Regional Economic Strategy."

Andrew Stevenson, Chief Executive of E-Synergy Limited said: "We’re pleased to have won the contract to manage emda’s venture capital fund and feel excited about the prospects of helping entrepreneurs across the region make their business vision a commercial reality."

The fund is welcomed by Martin French, Director of Innovation East Midlands (InnEM), who says: "InnEM is due to publish its regional innovation strategy later this year. This will promote a range of appropriate finance products, including this venture capital fund, as vital components of a healthy innovation system which maximises growth potential across the East Midlands."

During the evaluation process of the submitted tenders, emda benefited from the professional services of the Nottingham office of Grant Thornton LLP in conducting detailed due diligence and legal support from the Leicester office of Harvey Ingram LLP.