VGC Partners closes Fund II at over £50m
Growth capital investor VGC Partners has announced the close of Fund II at £50.25m, to target UK-based consumer, media and tech companies.
The firm has been supported by a £30m 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 the Bank’s 28th ECF.
VGC will be investing between £2m and £5m for minority stakes in high growth consumer, media and technology companies. It will back experienced management teams with enterprise values between £10m and £25m.
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 £2m to £5m 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.”
VGC Partners was established in 2011 by Parminder Basran. It operated on a deal-by-deal basis prior to launching its $40m 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, which was sold to Audi in 2017 for $91m, and 10Ten, a talent management company.
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 £1.2bn (including third party investment) has been committed through the ECF programme which, as a significant contributor to the UK Venture Capital industry, has provided finance to 489 smaller UK high growth businesses.
Patient capital is crucial for growing smaller ambitious companies into large, world-leading businesses. Following 2017’s Patient Capital Review, at Autumn Budget 2017 the Government committed to maintaining the ECF programme with up to £1bn of commitments over the next 10 years, which is expected to support at least £1.5bn of new investment.
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Notes to editors
About VGC Partners
Founded in London in 2011, VGC Partners is a growth capital investor with c.£100m under management across several funds and investment vehicles. The firm is backed by a number of institutions and high net worth individuals who have experience in building consumer, media and technology companies.
VGC Partners’ strategy is built on taking significant minority stakes in private companies, investing between £2m and £5m and working alongside management teams to optimise value and support sales to either private equity or trade buyers. This includes leveraging technology, corporate partners and operational networks across the US, Europe and Asia-Pacific to help drive meaningful growth for its portfolio.
• Investment in SuperAwesome, the UK based media business that enables safe digital engagement for children under 13 years of age. Its technology is used by Lego, Hasbro, Mattel and Disney, helping them build an audience across North America and Europe. Mayfair Equity Partners went on to back SuperAwesome with a £17m investment in July 2017.
• Partial exit of Iconic Images, the company which owns the archive of a number of photographers, including Terry O’Neill. This generated a 2x return in 18 months.
• Investment in 10Ten, the talent management company run by Terry Byrne, who has managed a number of high-profile figures in football, including Pelé and David Beckham.
• The sale of car rental company Silvercar to Audi in 2017 for $91m
About the British Business Bank
The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.
The British Business Bank programmes are supporting more than £5.9bn of finance to over 82,000 smaller businesses (as at end of September 2018).
As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options available to smaller businesses:
• The Business Finance Guide (published in partnership with the ICAEW and a further 21 business and finance organisations) impartially sets out the range of finance options available to businesses at all stages – from start-ups to SMEs and growing mid-sized companies. Businesses can take the interactive journey at www.thebusinessfinanceguide.co.uk/bbb.
• The new British Business Bank Finance Hub provides independent and impartial information to high-growth businesses about their finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success. The new site also features case studies and learnings from real businesses to guide businesses through the process of applying for growth finance.
As the holding company of the group operating under the trading name of British Business Bank, British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). The British Business Bank operates under its own brand name through a number of subsidiaries, one of which is authorised and regulated by the FCA.
British Business Bank plc and its principal operating subsidiaries are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found on the British Business Bank plc website.
British Business Bank Enterprise Capital Funds (ECFs) are managed by experienced fund managers from a variety of backgrounds – including teams from the venture capital industry as well as serial entrepreneurs with a history of success in building early stage UK companies.
They are commercially-focused funds which bring together private and public money to make equity investments in high growth businesses. The British Business Bank’s rolling investment programme of commitments to new Enterprise Capital Funds is a competitive process, with typically 2 to 3 investments made per year. VGC Partners Fund II is the 28th ECF in the programme.
The investment from British Business Bank into VGC Partners Fund II does not amount to any endorsement or warranty from British Business Finance Limited, the British Business Bank plc, or the government of the UK.
Enterprise Capital Funds are administered by British Business Finance Ltd, a wholly owned subsidiary of British Business Bank plc.