LONDON – Two of the United Kingdom’s leading smaller-company specialists, Luke Johnson and Mike Whitaker, have teamed with venture and corporate finance house NewMedia Investors (NMI) and GlobalNet Financial.com to form NewMedia SPARK, an incubator vehicle intended to become Europe’s first quoted Internet-focused fund.
By joining NewMedia Spark with 10-INVEST, a planned Internet-based stock placement operation, the founders hope to create a full-service integrated investment banking business focused on new technology companies. The start of the value chain for both NewMedia SPARK and 10-INVEST is NMI, which will play an instrumental role in sourcing investment opportunities.
The initiative – which the founders describe as the first fully integrated development service for high-tech start-ups – is designed to mirror the success of companies such as CMGI in the United States and SOFTBANK in Asia and Europe.
The founders will provide half of NewMedia Spark’s initial GBP10 million ($17 million) equity, raising the balance from institutional and private sources. Once the fund has completed its first wave of investments – planned for the coming months – it will float on the Alternative Investment Market (AIM). NMI chairman Tom Teichman, who will also chair the new incubator fund said the plan is to increase NMI SPARK’s resources to between GBP50 million and GBP100 million ($84 million and $167 million). Although the fund will have a strong focus on Internet and e-commerce ventures, it will invest in start-up- to early-stage businesses across the full spectrum of IT companies, Teichman says.
NewMedia SPARK’s founders are confident that the vehicle will attract strong retail support, given the shortage of avenues for private investors to back start-up and early-stage Internet-related ventures and the reputations of Johnson and Whitaker in the smaller companies field. However, the AIM vehicle also should appeal to a broad range of institutional investors because in tandem with 10-INVEST, it will have the capacity to fund substantial companies from inception through IPO.
Subject to regulatory approval, the 10-INVEST equity distribution service will use GlobalNet’s U.K. iNvest Web site, as well as other European Web sites, to reach a wide retail audience. 10-INVEST will undertake both private placements and publicly listed equity issues.
NMI, a venture capital and corporate finance house specializing in software and Internet businesses, has completed transactions totaling $500 million since 1996, including Argonaut Software, ARC, Lastminute.com and Worth Global Style Network. NMI portfolio companies have, in later funding rounds, attracted support from high-calibre venture houses including Apax Partners & Co. Ventures, Amadeus and Advent International and corporate investors such as Deutsche Telekom and Nomura.
Johnson is chairman of AIM-listed restaurant group Belgo, and he manages the Intrinsic Value investment trust. He also is non-executive director of the Elderstreet Downing VCT. Whitaker was a co-founder of Collins Stewart, the eight-year old brokerage firm sold to Singer & Friedlander last year for GBP45 million ($75 million). Whitaker will be chief executive officer of NewMedia Spark, while Andrew Carruthers of NMI becomes chief operating officer. GlobalNet CEO Stanley Hollander and Luke Johnson also have board seats.
NewMedia SPARK, 10-INVEST and their founders will be linked by a complex web of cross-shareholdings. SPARK will have options to purchase up to 10% of NMI, 15% of 10-INVEST and 3% of GlobalNet, while GlobalNet may acquire up to 10% of 10-INVEST.