Government fund of funds manager Capital For Enterprise (CfEL) is providing what it calls a ‘welcome boost’ for venture capital fund managers by lowering the rate it charges on capital.
Going forward, it will now only be charging a 3 per cent rate on new commitments, down from the 4 per cent it previously was.
CfEL is a fund management company which designs, delivers and manages venture capital and debt guarantee schemes on behalf of the public and private sectors. It has a reported £1.2 billion of assets and liabilities under its direct management.
The Enterprise Capital Funds (ECF) programme was established in 2006 and sees CfEL allocate up to £25 million of investment into new venture capita funds.
To date, CfEL has put together a portfolio of 12 active funds, with some £400 million committed funding from public and private sources.
Rory Earley, CEO of CfEL, says that a ‘major key’ to the success of the ECF programme has been the managers’ track record of nurturing new ideas and fresh business talent in the UK.
He adds, ‘We are keen to talk to prospective managers from a variety of backgrounds who share this skill and have the ambition and ability to manage a fund.’
More on Capital For Enterprise:
- CfEL makes its first investment
- Interview with Capital for Enterprise CEO Rory Earley
- First CfEL exits for Maven
CfEL says that it plans to continue to invest in two to three funds per year and has also updated its ‘Guidance for Prospective Managers’ to provide information for those thinking of managing an ECF.
Speaking to GrowthBusiness in a prior interview, Earley commented, ‘The market has shifted. Institutional investors are much less willing than they used to be to invest in early-stage capital funds. There is a real scarcity of capital, so there is more and more demand for what we do.’
When asked what kind of funds CfEL invests in, he added, ‘We have a mantra when we are looking for funds. We invest in stable, competent, well-motivated teams, whose interests are aligned with us, and that sounds fairly simple.
‘But because we enter into agreements with them that last 12 years, you have to make sure that team is going to stick together for 12 years – now that’s longer than most marriages.’
