Sure Valley Ventures, the London, Dublin and Cambridge-based VC, has closed £85m of a £95m software fund, including £50m of investment from British Business Bank.
The seed capital investor, which invests in high-growth software companies in sectors including the metaverse, AI and cybersecurity, plans to open a new office in Manchester.
Barry Downes, co-founder and managing partner of Sure Valley Ventures, said: “When you look across the UK, the creative technology clusters are much broader than London. In creative tech, it really pays to get outside. There are clusters across the North of England in Manchester, Leeds, Sheffield and Newcastle.
“Brighton is a big area in gaming development, while Belfast is a hugely creative city helped by universities, game production and lots of media in general.
“London is great – it’s the home of start-ups in Europe and you’ll still see lots of deals around London and Cambridge – but there are lots of opportunities across the UK.”
Who are Sure Valley Ventures investing in?
The fund’s first investment will be into a yet-to-be-announced Belfast-based start-up, with plans to invest in 25 early-stage software start-ups in total.
Downes said: “Typically, we invest in about one in 100 companies that we meet. Our model for this fund is to invest in five a year.
“The beauty of this model is the metaverse will evolve over time and different opportunities will emerge based upon the technology available.”
Indeed, one start-up Sure Valley is already investing in is Virtex, a London-based VR developer which aims to capture real-world sports in an e-sports environment. Think putting on a VR headset and cheering on a football team as if you’re in the stadium, for example. Sure Valley recently participated in Virtex’s Series A round.
“When I look back over the last five years of investing in this space, it started off primarily as VR, then AR and now we’re starting to see advertising come through. We’re starting to see crypto enter it, too,” Downes added.
“We really want to be at the forefront of those and invest in the next wave of businesses.”
3 things Sure Valley looks for in portfolio companies
#1 – Early stage: Companies that show signs of scalability and where the firm can add value. “Because we’re an early-stage investor, we really help start-ups along that journey in the first year,” Downes said. This means helping to find investors for later funding rounds.
#2 – Disruptive innovation: “This is really about new market creation,” Downes said. “That market may be niche initially, but we can see massive potential for it. A good example of that would be Virtex for creating a brand-new market for live action sports delivered in a VR environment.”
#3 – Platform technology: Platform tech that’s doing something in a new way. “We’re looking for an underpinning platform that creates scalability in the business,” he said.