Henley in Arden, 16 December 2013. Venture capital provider Mercia Fund Management (MFM) has announced the launch of Mercia Growth Fund 3.
Mercia Growth Fund 3 is the latest incarnation of the company’s EIS/Seed EIS (SEIS) hybrid fund. The fund follows the success of Mercia Growth Fund 1 and 2, which invested across the UK in medtech, gaming, telecoms and e-commerce sectors. As with the previous funds, this new fund will provide a tax efficient investment route for its investors, while supporting small yet fast growing and revenue driven UK-based businesses.
Recently, the government announced the importance of supporting small to medium sized businesses (SMEs) with tax efficient investment structures available to private investors such as EIS and SEIS stating, specifically, that SEIS has already helped 1,250 businesses throughout Britain since its introduction in 2012. This has created a wave of diverse start-up businesses seeking investment. That’s why Mercia Fund Management has built an Investment Panel which offers deep market intelligence within the target investment sectors and helps the VC fund choose appropriate businesses that will offer the potential for excellent returns for investors in a timely fashion. In addition, Mercia Fund Management uniquely balances risk profile for its many private investors by combining early stage investing using SEIS (with its generous tax reliefs) together with EIS capital in much later stage and often profitable businesses.
Mark Payton, Managing Director of Mercia Fund Management, commented on the fund launch and Chancellor George Osborne’s recent words of encouragement in the Autumn Statement: “Mr Osborne states that the ‘UK government is backing British businesses all the way’. With some 80% of the work force employed by SMEs, and in the context of a growing economy led by the SME-base, these are indeed welcome words to both our target investees and our private investors seeking SEIS and EIS related tax reliefs. Clearly the government recognises the importance of maintaining these tax incentives to ensure the continued and targeted provision of investment capital to fuel the growth of key businesses in the UK.”
Since the launch of Mercia Growth Fund 1 in 2012, and the fact that MFM operates a syndicate model to ensure ample provision of capital in each of its businesses, Mercia Fund Management has invested in excess of £3 million into a series of businesses across the UK directly against a further £12 million into EIS and SEIS qualifying companies.
Coventry-based Warwick Audio is just one company that has secured funding in recent months. Specialising in high-tech loudspeakers, Warwick Audio signed a £1.25 million investment deal with Mercia Fund Management. Warwick Audio is growing its revenue base rapidly, and is now looking to escalate its product reach with this highly disruptive technology which offers fully flexible, lightweight speakers that cost a fraction of the price of standard speakers to manufacture (and they are produced in the UK) and use less than 75% of the power required by conventional speaker systems.
Tech start-up Kwanji based in London also secured funding led again by Mercia Fund Management and plans to bring its online foreign exchange portal for small businesses to market. Whilst university spin-outs CYD Design Ltd (De Montfort University, Leicester) and Smart Antennae Technologies (University of Birmingham) successfully closed recent seed fund rounds and offer highly disruptive approaches.
Mark Payton added: “Needless to say there is still work to be done, and our request to the Chancellor is to expand the amount of funding a new business can receive via Seed EIS. The lack of capital available to small and start-up companies throughout the UK is still a barrier to many. Our new hybrid fund provides the ideal mix of early stage, development and growth capital to support technology driven high-growth sectors and provide a risk/reward profile suitable for private investors seeking what are now truly amazing and legitimate tax reliefs.”
In addition to portfolio growth, the MFM team has grown considerably in the last year with a series of senior-level appointments maintaining its reputation as a hands-on investor. Former CEO of SEGA Europe Mike Hayes was recently appointed to head up Mercia’s Digital and E-commerce division, whilst ex CEO of ApaTech Simon Cartmell joined its Investment Panel. Mercia also appointed Talon Golding as Sales and Investor Relations Manager.
The closing date for Mercia Growth Fund 3 is set at 31st April 2014.
NB: SEIS is Seed Enterprise Investment Scheme and EIS is Enterprise Investment Scheme.
About Mercia Fund Management
Mercia Fund Management (MFM) is a venture capital fund manager with circa £19 million under active management. MFM provides investment capital throughout a company’s journey (from early stage to expansion capital), support services for its portfolio and accommodation at its post-seed incubator at Forward House, Henley in Aden, Warwickshire.
Alongside Mercia Fund 1 (an evergreen fund investing in University spinouts in the Midlands) and Mercia Fund 2, in 2012, Mercia Growth Fund 1 (a hybrid EIS & SEIS fund) was established (£1.5 million), and in 2013 Mercia Growth Fund 2 was raised (£2.5 million). Mercia Growth Fund 3 was launched in the last week of November 2013 to private investors and their intermediaries, and is targeting to raise circa £4 million. MFM is an FCA authorised and regulated fund manager under FSMA (FRN: 524856).