VCTs usually manage money in the hundreds of millions, and so below a particular sized company they cannot invest as transaction costs make it uneconomic. One fund manager specialising in the creative industries told a DEMOS report: ‘We don’t really invest in companies that have less that £1 million in turnover, and our preferred size of company to invest in is around £2 million to £5 million turnover.’ Most VCTs only invest if there is a clear, timed exit strategy, and their exit timescale is usually around five years.

Creative propositions more suited to Angel and VCT Investment:

• Firms without a steady revenue stream from existing customers or commitments to pay from business customers (this may be particularly true for start-up music, TV, film and video games companies)

• Firms where the potential reward-to-risk ratio is high, in particular when bringing a constant stream of new and unpredictable creative products to market.

• Young businesses, especially those without their own capital to invest.

Average loan value:  £2m – £5m
Average Exit terms:   Five years
Restrictions:  Most will not consider investments under £1m

 

Web:

www.startups.co.uk
www.ingeniousmedia.co.uk
www.edge.uk.com