NESTA has launched a new £50million fund to invest in innovative early-stage businesses over the next five years.
The fund will look to invest up to £10 million each year, offering individual start-ups seed money of up to £250,000 and investing £500,000 per company over the course of its development.
In addition to financial input, companies will receive ongoing mentoring and business support from NESTA to maximise the potential of the business and attract further rounds of funding.
The fund will focus on identifying, investing in and supporting particularly innovative early stage companies in the ICT, healthcare, technology and environmental technology sectors. A key aim of the Fund is to attract other investors to work in partnership with NESTA in funding selected start-ups.
NESTA will also use the Fund to invest in seed or early-stage funds, either as a limited partner or co-investor and will make two or three investments per year from £1million to £3 million.
Commenting on the new Fund, NESTA Chief Executive, Jonathan Kestenbaum said: ‘With the private sector vacating early-stage funding after the dot.com era and the government now shifting its focus to more developed businesses, the UK is facing a potential dearth of investment in this area. Our fund is designed to plug this gap both directly and by demonstrating the viability of early-stage investment to third parties.’
David Hunter, MD of NESTA Investments continued: ‘Our aim is to demonstrate models of early-stage investment that generate competitive returns and, in doing so, act as a trailblazer for the private sector. This reflects our desire to bring a commercial ethos to the way in which public funds are invested and to create more of a partnership approach between public funds and their private counterparts.’
The new fund is to be overseen by an Investment Committee of private venture heavy-weights, including Adrian Beecroft, Partner and former Chief Investment Officer at Apax , former Deloitte partner, Ian McIsaac, an expert in global risk management, Sherry Coutu, a successful entrepreneur and well-known early-stage technology investor; NESTA Chairman, Chris Powell and Marc Clement, Head of Research and Innovation at Swansea University.
The new fund will boost NESTA’s existing investment portfolio, which consists of 50 companies including Light Blue Optics, laser projection technology pioneers, and Symetrica, radiation detection and material identification technology specialists.
NESTA also has a history of leveraging significant private co-investment – every £1 invested by NESTA since October 2003 has attracted £5 in private finance.