E-Synergy is awarded Enterprise Capital Fund

29 March 2006

Trade and Industry Secretary Alan Johnson today announced the first two Enterprise Capital Funds created under a multi-million pound Government scheme to boost innovation, jobs and growth for small and medium-sized businesses in the UK.

Enterprise Capital Funds combine Government and private sector money to help bridge the equity gap faced by small and medium sized businesses (SMEs).

Mr Johnson said:

"Many businesses with genuine potential fall at the equity gap hurdle - that 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.

"These Enterprise Capital Funds will provide much needed investment with sound commercial management that would not otherwise be available. This is an excellent example of how Government can work with the private sector to produce world-class support for British business."

One of the two Enterprise Capital Funds will be:

21st Century Sustainable Technology Growth Fund - a £30m fund which will operate across the UK and focus on high growth companies employing leading edge sustainable technology. E-Synergy Limited, which has close links with the UK's research community and expertise in selecting and backing strong technology in early-stage companies, will manage the Fund.

A competitive bidding round for fund managers or business angel groups to run ECFs was launched in July 2005 with a closing date of 16 September. SBS received 45 bids, which was at the top end of Governments expectations. The overall quality of the bids was high with many bids already having strong private investor support.

While the UK has dynamic and efficient finance markets that meet the investment needs of most SMEs, there is a scarcity of equity capital in the £500,000 to £2m funding rounds, which makes it difficult for a number of businesses to raise the finance they need. One reason for this is that the costs of making investments, for example due diligence and legal costs, are largely fixed. This makes it more attractive for commercial funds to seek larger deal sizes where these costs are less significant, leaving an equity gap.

Andrew Stevenson, Chief Executive of E-Synergy said:

"We are delighted to be selected as one of the first two Enterprise Capital Funds in the UK. We believe that as intimated in the speech of the Chancellor of the Exchequer, there is an excellent opportunity for the UK to develop strong growth companies with innovative sustainable technology and global market potential. Our fund will aim to take a lead in helping businesses with genuine potential cross the equity gap hurdle."