Venture Capital and Private Equity. a Return to Form? Although Many of Us Entered 2010 with Trepidation after 'The Year That Was', Looking Back 2010 Has Been a Positive Step in the Right Direction for the Venture Capital and Private Equity Markets. Louise Fleming, Associate and James Trevis, Partner, Both Private Equity Specialists at International Law Firm Eversheds LLP, Report
Venture Capital While the fundraising environment for early stage businesses remains challenging, entrepreneurs and venture capitalists in the Midlands can reflect on 2010 as a year of positive developments in three key areas: fundraising, new investments and exits.
2010 began with fund managers in the Midlands eagerly awaiting the outcome of up to pounds 45 million of funds that were made available by Advantage West Midlands, two of which were awarded to Midven.
These now comprise the Early Advantage Fund, an pounds 8 million fund targeted at early stage and technology propositions, and the Exceed Midlands Advantage Fund, for which Midven attracted matched funding from Lloyds Development Capital alongside pounds 9.2 million from AWM. Both these funds have hit the ground running, making a total of 14 new investments in local businesses in their first year of operation.
The year also saw a very strong level of new investment activity from Catapult Venture Managers, who recently invested alongside the Mercia Technology Seed Fund in Intelligent Orthopaedics, and teamed up with Enterprise Ventures to continue their support of Biofortuna. We also saw continued interest from business angels in opportunities including healthcare, automotive, renewables, technology and telecoms throughout the year.
An improvement in the general M&A market, and in particular a resurgence of trade buyers, also provided venture capital firms with the opportunity to achieve a number of successful exits.
Key local examples are the sale of Coventry-based Scriptswitch, a provider of software for the healthcare market, to United Health Group, and the pounds 9 million sale of Dynamic Change, another healthcare software vendor, to Allocate Software PLC, achieving significant cash and IRR returns for ISIS and Midven respectively.
The difficulty encountered by early stage ventures in obtaining debt finance from clearing banks also provided the opportunity for new finance providers looking to fill this gap.
The Business Loan Network, or "thincats.com", was set up by ex-Advantage Early Growth Fund managing director Kevin Caley to provide an online market for individuals to provide commercial loans to early stage businesses, and has already achieved a number of completions.
Private Equity 2010 was a year of recovery for private equity and there were a number of local new investment success stories, including the management buy-out of the Synseal extrusions business backed by H. …