The London Co-Investment Fund (LCIF) has announced a new venture capital fund to invest in London-based technology startups. Created by Funding London and Capital Enterprise, LCIF is a government-backed fund with 25 million pounds being contributed by the City of London and up to another 60 million pounds from private sector partners. In addition to providing additional funding, the private sector partners are also tasked with finding and reviewing technology startups for investment.
Among the six, and getting the largest investment pool of five million pounds to allocate, is a joint partnership of equity crowdfunding platform Crowdcube and asset management firm Braveheart Investment Group. Under the plan, the two firms will be investing funds in companies selling equity using the Crowdcube platform, with Braveheart conducting due diligence to spot suitable firms to fund.
The involvement of Crowdcube with the LCIF represents the first time a UK government entity is using a crowdfunding platform for allocation of investable funds. The UK has been one of the more accommodating jurisdictions around the world for promoting the use of equity crowdfunding. Therefore, the partnership with Crowdcube shows that the UK government isn’t only backing new financial technology but using it themselves.
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Commenting about being selected in his company’s blog, co-founder of Crowdcube Luke Lang stated, “For the UK Government to invest in London’s top start-ups through Crowdcube, alongside the crowd, is an exciting prospect and underlines Crowdcube’s reputation as an effective way for high growth tech firms to raise finance.”
In addition to crowdfunding being utilized through Crowdcube, the LCIF has partnered with an angel investing consortium for syndicate funding. Combining resources of London Business Angels, Angel Lab and Firestartr, the three firms will be introducing potential technology investments for syndicate investing to their angel members.
A recent phenomena, syndicates have become an important part of the startup funding ecosystem, as combined funds from angels are often able to reach larger sums, thus competing with traditional venture funds. In addition, besides the monetary benefits, startups are seeing advantages with syndicates as it promotes the company and provides a wider shareholder base to leverage for contacts.