Business Secretary Vince Cable has announced a £25 million fund for “small but innovative” UK businesses.
The fund is provided under a government scheme called Episode 1, which supports fund managers who invest in small, high-growth businesses. The fund, which is the 14th Enterprise Capital Fund, has also attracted £12.5 million of private investment on top of the £25 million of public money.
It aims to invest between £250,000 and £2 million in 20 to 30 early-stage technology companies.
“We are determined to give entrepreneurs the financial support they need to grow. This new £37.5 million Enterprise Capital Fund will target a serious gap in the equity market for high-growth small firms,” said Cable.
Episode 1 will be led by serial investor Dr Simon Murdoch, who has backed successful UK tech companies including movie rental service LoveFilm, music recognition firm Shazam and property website Zoopla.
“I know from personal experience, it is hard to start and grow a business,” said Murdoch. “Raising venture funding is even harder.
“Our aim is to establish Episode 1 as the best place to come for early stage technology entrepreneurs looking for up to £2 million of funding.”
The creation of Episode 1 follows a tax relief for investors of new start-ups that Chancellor George Osborne announced in 2011, to encourage investment in entrepreneurial businesses.