Bridge that funding gap

Small businesses in London have become the first in the country to have access to small amounts of risk capital through the 'Early Growth Funds'.

The London Seed Capital Fund aims to bridge the risk-funding gap by co-investing with business angels and helping to lever in further capital, such as bank debt. It will provide a funding option for new start-ups and businesses in the early stages of growth.

The £2.8 million fund - made up of a £2.65 million investment from the DTI's Small Business Service and £150,000 from Greater London Enterprise - will operate through the one London Business Angels Network. Match funding of £2.8 million from business angels in London will also be levered in.

The London Seed Capital Fund is the first of the Early Growth Funds to be launched. Other funds will operate in each English region. They will be aimed at companies who want less investment than is usually provided by the City institutions, but find themselves caught in the 'equity funding gap'.

The first investment was for £100,000 for Primal Soup, a food manufacturer based in West London which supplies some of the main coffee shop chains.

Anthony Clarke, Managing Director of London Seed Capital, said: "Each year, hundreds of business angel investments fail to complete for the want of the last few thousand pounds.

"To be able to provide this final piece of the jigsaw is the real added value offered by the London Seed Capital Fund."

Businesses can get more information on the London Seed Capital Fund by emailing info@londonseedcapital.com.