Investment criteria
Our investment policy restricts us to invest in companies:
- that are SMEs
- that are unquoted companies - i.e. that are not quoted on any form of exchange (e.g. AIM, London Stock Exchange etc.)
- that have their headquarters, or that conduct a material part of their business, in Greater London. (What funds are available if I am outside Greater London)?
- that do not undertake business activities in certain restricted sectors.
Size of initial investment
- The Capital Fund can make an initial investment of up to £330,000
- The Fund can invest alone or alongside/after high net worth individuals ("business angels"), debt finance, corporate venturing or seed funds such as the University Challenge Funds
- If investing alongside or after an institutional investor, the aggregate amount of the investment must not be greater than £330,000. In practice, this makes it unlikely that we can invest in proposals with existing institutional funding
Size of subsequent investment(s)
- The Capital Fund can invest up to a further £330,000 after at least 6 months
- In some circumstances, alongside other new investors, the Fund can follow on its investments with up to £5m in total in a single company
Stage of development
We invest in businesses at all stages of development - i.e. start-ups, early stage, development, management buyouts and management buyins. In all cases we look for businesses which are able to demonstrate the potential for rapid sustainable growth.
Investment structure
The Capital Fund will normally invest for a combination of:
- Equity capital
- Loan stock or preference shares
We will typically take a minority equity stake of between 10% and 40%.
We need to provide our shareholders with returns on their investments in the Fund. The loan stock or preference shares provide a degree of capital repayment and interest/dividends provide some running yield. However, in common with other venture capital investors, The Capital Fund expects that in most cases the primary return to investors will come from capital gains achieved through the sale of its equity stake. Our relationship with the companies we back is expected to be medium-to-long-term i.e. we will be seeking an exit from our investment after 3 to 5 years.
Prior to investing, we will undertake commercial and financial due diligence into a company. After investing, we reserve the right to appoint a Non-Executive Director to the Board of an investee company.
Read about "What are we looking for?" in the companies we back.
If you are in any doubt about whether your business meets The Capital Fund's investment criteria, please contact us.
The Capital Fund is managed by YFM Venture Finance Limited. YFM Venture Finance is authorised and regulated by the Financial Services Authority and is part of the YFM Group. Trading names used in the past by the London office include London Fund Managers, Yorkshire Venture Finance and Yorkshire Fund Managers.