SFC Ventures secured a new commitment of LP capital to help leverage its investments into pre-seed and seed-stage UK start-ups.
SFC Ventures, formerly known as the Startup Funding Club, announced an investment of £10 million ($12.43 million, €11.47) from British Business Investments, a commercial subsidiary of the British Business Bank, in mid-April.
The firm will use this capital to continue investing in new and emerging companies through its “Regional Angels Programme.” This combines money from the firm’s vehicles with additional funds from angel investors and external capital bases, such as this one from BBI, to leverage its deals.
“We cornerstone an investment through our fund and then reach out to our angel network to invest alongside us,” Stephen Page, the founder and CEO of SFC Ventures told Venture Capital Journal. “We top it off with this great scheme with the BBI.”
The firm has already started to deploy the new commitment. Page said that SFC invested more than £5 million into 28 companies during Q1 which included £1.6 million of capital from BBI.
“We would make a £150,000 commitment that is then leveraged up through angels and the regional fund where it can go up to half a million,” Page said. “It’s a really excellent scheme for companies to muscle up and survive through at least their first year and arguably longer just on the round we’ve done.”
Page said that SFC only invested about £3 million of its own capital during Q1 and that this structure allows them to stretch their capital. He added that some deals have up to 35 percent of the funding come from angels and these other external pools of capital.
The firm invests in consumer and enterprise start-ups and has a portfolio that includes everything from fintech to food and beverage. So far in 2020, the firm has done deals in fintech, medtech and B2B software companies.
The firms most recent investments include a £172,500 seed investment into Spintex, a manufacturing company, and a £100,000 investment into Blue Skies Space, a company that provides access to space data.
Page said that in the wake of the covid-19 pandemic, he thinks this extra pool of capital puts the firm in a solid position to help itself and its portfolio companies see success in this downturn.
He added that they’ve added a questionnaire to their due diligence process that asks start-ups about how they are prepared to weather coronavirus and deal with things like late payments from customers and cash runway.
“I think we are in a good position,” Page said. “There are always good companies coming out in a crisis. That will not change.”
SFC Ventures was founded in 2012 and has made more than 150 investments into pre-seed and seed-stage UK companies.