Created, built and sold on – an early stage private equity fund in Europe
A market niche was identified whereby many small start-ups in the UK were unable to acquire funding for development capital.
We developed a fund structure that took advantage of diversification to mitigate risk in small start-ups. Many Business Angels wanted to invest through a fund structure to diversify their risk to these small companies. While the risk was high, the returns and the personal satisfaction of being close to these companies was higher.
I established a FSA regulated Collective Investment Vehicle, which was domiciled and administered in Jersey, Channel Islands. I took on partners for management and distribution. We had a joint venture with the largest Business Angel company in Europe and so had a vast deal flow. We carried out due diligence on a great many companies (the format being the forerunner of the TV programme, ‘Dragon’s Den’). We developed links with high-tech universities for access to intellectual deal flow (Imperial College, Cambridge University). Funding was very difficult in the recession of the time, but we in fact received an unsolicited bid to buy the whole private equity vehicle at our launch. We therefore decided to sell the vehicle to our competitor as the bid was most acceptable and the buyer’s distribution potential was somewhat larger than our own.
The private equity company created some ten years ago is still in existence today in the UK, and there are opportunities to do the same thing again in Asia.