Investment funds in venture capital twist
By Tim Bradshaw, Digital Media Correspondent, March 29 2011 01:10
Two new early stage technology investment funds are taking advantage of the government’s push to encourage entrepreneurship, by putting a fresh twist on traditional models of venture capital.
At the same time, Spark Ventures, a backer of Lastminute.com among other internet companies, and BBH, the Soho-based advertising agency, are teaming up to provide web start-ups with finance and branding advice. The two companies are aiming to raise £10m from wealthy individuals for the Black Sheep Fund – named after BBH’s contrarian logo – and have initially invested £1m.
The new funds follow the launch of a government initiative called StartUp Britain, a package of benefits for entrepreneurs from companies such as O2, McKinsey and Microsoft. Last week’s Budget also included several measures to stimulate early stage investing, such as increasing the rate of income tax relief to 30 per cent under the Enterprise Investment Scheme.
“The fund is going to benefit from EIS. We think there is a great shortage of early stage capital in this area,” said Tom Teichman, chairman of Spark Ventures.
BBH’s involvement comes through Zag, its “brand invention” business. “We look for brand lags, where consumer activity has shifted and brands haven’t caught up,” said Neil Munn, Zag’s chief executive. The Black Sheep Fund will invest in internet start-ups and ideas generated by Zag.
White Bear Yard was founded in 2009 by Stefan Glaenzer, co-founder of Ricardo.de and chairman of music community Last.fm, and Eileen Burbidge, Skype’s third employee in London, to bring more of the companies it financed “under one roof”. Robert Dighero, former finance chief of Tradus (formerly QXL) which acquired Ricardo in 2000, joined White Bear Yard last year.
“We are unique to many other funds because as managers the three of us come from entrepreneurial and operational backgrounds – not that of bankers,” Ms Burbidge said, and “genuinely love early stage investing”.
The government’s Enterprise Capital Fund scheme matched £12.5m from private individuals with £25m of public funds to create Passion Capital.
Copyright The Financial Times Limited 2011.