£20m start-up fund launched to bridge Europe’s ‘equity gap’

Valerie | 27 Apr 2009, 10:00

Two of Britain’s best-known internet entrepreneurs are teaming up to launch a development fund to back start-up technology companies and boost innovation in Europe.

The founder of social networking site Bebo, Michael Birch, and Brent Hoberman, best known for travel service lastminute.com have partnered to set up the European Founders Capital (EFC). Others behind the new fund include Rogan Angelini-Hurll, a research analyst and an old friend of Hoberman’s, and Peter Dubens, who established Pipex’s ISP business.

According to the latest figures released by the British Venture Capital Association, UK-based startup investments have fallen sharply. In 2008, investment decreased below £20bn for the first time since 2005 and the number of companies receiving backing fell from 1,680 in 2007 to 1,571 last year.

Additional research from Pricewaterhouse Coopers shows that early-stage investment in UK-based companies has declined from £434m in 2007 to £346m in 2008. The research also shows the US continues to dominate as a source of UK startup funding, contributing £10.4bn or 45 per cent of the total.

In an attempt to capitalise on the downturn and to give promising young internet startups in Europe the opportunity to get going in this tough environment, the EFC is being set up with an initial £20m of seed funding, which will rise quickly to £50m.

Econsultancy notes that whist there is still a great deal of innovation taking place amongst startups today, it is unclear what the ‘next big thing’ will be. A boost of this kind is likely to have a far reaching impact on encouraging innovation and creativity.

Hoberman said:

“We are going to see some great, disruptive companies coming out of this downturn.”