In December 2014, Newable Private Investing (NPI), formerly London Business Angels (LBA), was selected as a partner of London Co-Investment Fund (LCIF) following a formal contract tender. LCIF appointed six partners at this time in order to deploy circa £25m of its funds alongside its selected partners as a source of direct equity investment into London’s seed and early stage potentially high growth technology companies.
LCIF’s investment horizon was circa 4 years with a target portfolio of circa 150 completed investments alongside its partners. It retained the right to make its own investment decision on each co-investment with its partners and the target gearing on each investment was circa 4x per £ of private money for each £1 of publicly sourced LCIF funding. LCIF contracted with each partner to make its investment decision promptly with a view to their investment process being completed within 14 days.
NPI was by far LCIF’s most active partner over the period from December 2014. As at 8th May 2019, LCIF completed investments into 34 London-based seed and early stage companies introduced to them by NPI with 7 follow-on investments made by LCIF too. LCIF invested £4.7m of its own funds into these syndicated investments with NPI who also introduced over £20m of new equity investment at the same time, predominantly from its own funds and angel group members.
The LCIF/NPI portfolio is performing positively to date with a current valuation multiple of circa 1.5 compared to cost, with a projected multiple approaching 2x cost later this year. NPI Is currently closing two additional new investments with LCIF under their 2014 contract with all approvals in place pending completion shortly.
This NPI/LCIF public-private initiative operating in the very acute post-seed/pre Series A equity gap has proven to be a great success in enabling NPI to leverage the public funding to help to close its syndicated angel investments. This has provided a ready source of capital to technology companies who have passed their proof of concept stage with many of these investees being sourced from London’s incubators or accelerators. London’s early stage equity ecosystem has greatly benefited in this respect.
In view of the positive outcome of this highly successful public/private co-investment project, NPI regrets the decision taken by London’s policy makers to now end this scheme. Nevertheless, its success provides a template for other UK cities to similarly follow this model.
By Anthony Clarke, Director of Newable Ventures