A new venture capital fund is being launched by UK entrepreneurs in order to kick-start innovation in Europe.
According to the latest figures released by the British Venture Capital Association, UK-based startup investments have fallen sharply. In 2008, investment decreased below £20bn for the first time since 2005 and the number of companies receiving backing fell from 1,680 in 2007 to 1,571 last year.
Early-stage investment in UK-based companies has grown particularly weak, declining from £434m in 2007 to £346m in 2008. The research, collected by Pricewaterhouse Coopers, also shows the US continues to dominate as a source of UK startup funding, contributing £10.4bn or 45 per cent of the total.
The establishment of the European Founders Capital (EFC) by co-founder of Bebo, Michael Birch, and founder of lastminute.com, Brent Hoberman, aims to reverse this trend at a time when the US venture capital market also appears to be dwindling.
The EFC, which currently does not have a web site, will start with £20m of funds but aims to increase this to £50m. It will primarily focus on early stage funding and all investment will come directly from the founders.
“We aren’t taking institutional money,” Birch told The Sunday Times. “All the money comes from founders – people who have done it before.”
Others behind the new fund include Rogan Angelini-Hurll, a research analyst and an old friend of Hoberman's, and Peter Dubens, who established Pipex's ISP business
In the first quarter of 2009, US venture capital investment was down 47 per cent in dollars and 37 per cent in deals from the previous quarter when $5.7bn (£3.9bn) was invested in 866 deals, according to a MoneyTree report from Pricewatehouse Coopers and the US National Venture Capital Association.
The quarter marks the lowest US venture investment level since 1997.
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