Growth capital investor VGC Partners has closed its Fund II at £50.3 million, to target UK-based consumer, media and tech companies.
The firm, which currently has about £100 million of assets under management, has been supported by a £30 million commitment from the British Business Bank through its Enterprise Capital Funds (ECF) programme for early stage venture capital.
Additional funds have been secured from private investors and high-net worth individuals. The new fund is British Business Bank’s 28th ECF.
VGC will be investing between £2 million and £5 million for minority stakes in high-growth consumer, media and technology companies.
It will back experienced management teams with company values between £10 million and £25 million.
VGC Partners was established in 2011 by Parminder Basran. It operated on a deal-by-deal basis prior to launching its $40 million maiden fund, the Velos Partners Fund I, which was anchored by Eduardo Saverin, the co-founder of Facebook.
The firm has previously led investment into music studio and publishing business Metropolis London; car rental company Silvercar, and talent management company 10Ten, which has managed footballers Pele and David Beckham.
VGC sold its stake in Metropolis 15 months after making its initial investment, generating a 4.3x return. It also realised its investment in car rental company Silvercar after selling the firm to Audi in 2017 for $91 million.
Earlier this month, VGC announced a £2 million investment in online sports clothing store WIT Fitness, which also has a gym at St Paul’s in London where Owen Farrell and the England rugby union team train.
Parminder Basran, founder and managing partner at VGC Partners, said: “For a number of years, growth capital has been underserved by investors in the UK. The most notable funding gap is in the £2 million to £5 million bracket where companies have insufficient capital to fully execute their growth strategies. We will be targeting businesses that have a clear track to profitability but are not quite ready for private equity investment.
“We are looking forward to putting this capital to work to help transform some of the UK’s most ambitious tech-enabled businesses. Not only will they benefit from access to capital, but our team has extensive networks across the US and Asia to help them grow internationally, as well as operational expertise to guide businesses along the right path.”
Ken Cooper, managing director, Venture Solutions at the British Business Bank, said: “The bank’s Enterprise Capital Fund programme is a key tool in helping to develop and maintain an effective venture capital provision in the UK. Funds such as VCG will ensure that funding continues to be available to high-growth smaller businesses that are looking to realise their growth potential. We are very pleased to add VGC as our 28th ECF fund.”
The British Business Bank’s ECF programme combines private and public money to make equity investments in high growth businesses. It aims to increase the supply of equity to UK growth companies and to lower the barriers to entry for fund managers looking to operate in the venture capital market. Since inception, around £1.2 billion (including third party investment) has been committed through the ECF programme which, as a contributor to the UK venture capital industry, has provided finance to 489 smaller UK high growth businesses.
Following 2017’s Patient Capital Review, at autumn Budget 2017 the government committed to maintaining the ECF programme with up to £1 billion of commitments over the next 10 years, which is expected to support at least £1.5 billion of new investment.