VGC Partners launches £10m EIS Fund

by | Feb 28, 2022

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Growth capital investor VGC Partners is launching a £10m specialist EIS fund that will invest in early-stage businesses working with the next generation of technology and consumers.

The fund will focus on businesses at Series A stage in consumer technology, digital media and gaming. The businesses selected will have proven products and markets plus the potential for rapid user or customer adoption and scalability.

The Series A stage of business growth is underserved by UK investors that leads to an equity gap that can hinder start-up progress. Industry analysis for 2020, by the British Venture Capital Association (BVCA), reported a total of £25.1bn private equity and venture capital investment in the UK. This represented a 12% year-on-year increase and the third consecutive year of growth. However, the venture capital investment share of this increased by only 2% year-on-year to £1.7bn. Deloitte, in their Future of Growth Capital report, identified that the UK lags other regions in growth investment.

VGC Partners manages over £100m of growth capital, and over the last 10 years has established deep networks with industry executives, corporate partners and funds across its target sectors. These networks, across North America, Europe and Asia-Pacific, have enabled its portfolio companies to grow quickly. For all growth investments the firm takes a proactive role, as driving operational improvement post-investment is a core part of the firm’s strategy.

VGC Partners will leverage its expansive network to introduce corporate partners that can support investee companies with technical mentorship, business-acceleration and marketing support. In addition, investee companies may access co-investment or follow-on funding from VGC Partners’ later stage funds or other venture capital funds within its network.

The first investments made by VGC Partners in companies at this stage of growth are on track to deliver returns greater than 5x, with five out of seven investments already exited. Notable recent exits include the sale of SuperAwesome to Epic Games, the company behind the popular video game Fortnite, and Iconic Images to New York-based Authentic Brands Group. SuperAwesome is a pioneer in the ‘kidtech’ market; it gives developers the tools to create safer digital experiences for younger audiences. Iconic Images owns and manages some of the world’s most famous photography archives. Both exits achieved significant returns for investors.

Alongside its specialist EIS fund and later-stage growth fund, VGC Partners manages a successful seed (SEIS) fund series, now in its sixth vintage. For the last two years this fund has partnered with Amazon Alexa to invest in the next generation of voice tech businesses. Notable successes in which the SEIS funds have invested include Percival, a modern British menswear business. It first raised SEIS funding from VGC Partners in 2018 and progressed to raise £3m from VGC Partners main growth fund in 2021 and is growing at over 250% year on year.

Parminder Basran (pictured), Founding Partner and CEO of VGC Partners said, “We identify businesses with robust and efficient operating models that support revenue growth of 100 to 400 per cent each year. Our aim with each business is to prepare them for a private equity or trade sale. We look for businesses with differentiated, defensible products and brands with passionate consumers or loyal commercial partners. Solid operating models and EBITDA generation are essential.”

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