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Business angels and public funding join forces to invest in
South-West Cleantech businesses
22 July 2010
A new source of funding for low carbon business is now available
in the South West of England. The South West RDA has invested £2.5m
into the South West Cleantech Co-investment Fund. The fund has been
established by South West Investment Group (Capital) Limited with
operational support from South West Angel and Investor Network
(SWAIN) and Regen SW. It is open for business.
The fund will, subject to conditions, provide funding of between
£50,000 and £100,000, alongside new equity investments, in
Cleantech businesses who are based in the region. It will help
support entrepreneurs and early stage businesses looking to develop
low carbon technologies and innovations with access to crucial
growth capital.
A key distinguishing feature of the fund is that it will only
invest alongside private investors or small Venture Capital firms
(Keystone Investors) who have both knowledge of the sector and
experience in making business investments.
Stephen Peacock, the South West RDA’s executive director
enterprise and innovation, said: “This is a fantastic opportunity
for the region’s low carbon industry to access a new source of
funding. The fund will help businesses grow and invest for the
future, creating hundreds of highly skilled jobs. This has come at
exactly the right time for the region’s thriving environmental
sector.”
SWIG Capital will administer the fund and ensure that the legal
and commercial obligations are met by the company. John Berry,
Executive Director of SWIG Capital commented: “We welcome the
creation of this Cleantech Co-investment Fund. Not only does it
encourage investment by the private sector in the region, but it
provides investment to those Cleantech businesses which could make
a real difference to building a low carbon economy for the South
West.”
SWAIN will undertake the initial evaluation of businesses to
ensure that they are attractive to investors and are ready for
investment. They will also be responsible for attracting and
identifying qualifying keystone investors. Philip Tellwright,
Managing Director of SWAIN commented “SWAIN has already been
successful in attracting private angel investment into almost 70
companies and the Cleantech Co-investment fund will help to
leverage the overall investment and will inevitably attract further
credible green investors”.
Regen SW, will ensure whether the core business of a company
qualifies it to be regarded as a Cleantech business. Merlin Hyman,
Chief Executive of Regen SW commented: “Regen SW is working with
over 900 businesses, local authorities, the regional development
agency and many other partners on a huge range of exciting projects
to the development of a vibrant low carbon economy in the South
West of England. The South West Cleantech Co-investment Fund is an
important part in developing this vision by enabling the private
sector to invest in the entrepreneurs, building the breakthrough
sustainable energy business of the future. Regen SW is, therefore,
delighted to be working with the fund partners on this exciting
initiative”.
If you are a company looking for equity investment that might
qualify as a Cleantech company, then you can find out more about
the qualifying criteria and the process involved from the SWAIN
website,www.swain.org.uk/CleanTech.aspx.
Investors considering investments in this sector wanting to pre
qualify as Keystone investors should also find out more by visiting
the SWAIN website.
ENDS
Contacts:
Billy McKenna, South West RDA Corporate Communications Manager,
01392 229 567, 07918 690 228
Notes to Editors
1. In November 2008 the South West RDA, within its ‘First Steps’
document, declared an aspiration to create a Green Opportunities
Fund for the South West Region. To deliver for the region on its
promise the South West RDA has provided capital for the South West
Cleantech Co-investment Fund.
2. South West Investment Group (Capital) Ltd is the fund holding
subsidiary of South West Investment Group Ltd and provides a range
of investment funds for start up and growing small businesses in
the South West of England. SWIG Capital holds the South West
Cleantech Co-investment Fund and monies will be invested and repaid
to the organisation.
3. South West Angel and Investor Network, connects private
investors (business angels), with companies looking for investment.
It operates throughout the South West region. SWAIN is an
independent not-for-profit company and is supported by the South
West RDA. It focuses on deal sizes ranging from £25,000 to
£750,000.SWAIN opens the door to successful investment in new and
growing businesses by providing low cost, professional and informal
support to companies and investors.
4. Regen SW is a not for profit company working to enable
business, local authorities and other organisations to deliver
renewable energy and energy efficiency and build a prosperous
low-carbon economy in the south west of England. www.regensw.co.uk
5. Professional support to SWIG Capital in developing the fund
has been provided by South West firms with considerable Corporate
Finance experience; Accountants Winter Rule and Lawyers Foot
Anstey
The strategy of using a mezzanine loan structure to risk share
with experienced investors has a number of advantages over some of
the more traditional approaches to funding of early stage
businesses:
- It means that the investment decision is made by someone, known
as the keystone investor, who in most cases has built a successful
business and understands what a sound commercial opportunity looks
like. Just as important as their commercial acumen is a profound
knowledge of the sector in which the business operates.
- The second key advantage is that the fund automatically
leverages in additional private funding. The keystone investor’s
share of the investment will be significant and in many cases will
be the largest investment. This ensures that the keystone investor,
who will in most cases be acting as the lead investor and will
undertake the lion’s share of the due diligence, is committed to
the long-term success of the business.
- The involvement of private investors in the evaluation and
selection of strong commercial opportunities, in the legal
negotiations and the ongoing tracking of the business, will
substantially reduce the overhead cost of managing the fund and
ultimately means more of the fund is available to be invested into
South West businesses.
For more information on CleanTech, please go to www.swain.org.uk/CleanTech.aspx