New advisory board gives further impetus to Enterprise Capital Fund

The Enterprise Capital Fund (ECF) is the UK’s answer to US style SBIC funds (small business investment funds focusing on seed level funding), a scheme which The Chilli has been campaigning for since its launch. Now the ECF has received further impetus as it gets a new body with a new chairman. The Small Business Service (SBS) announced that David Quysner has been appointed chairman of the ‘Finance for Investment Advisory Board’ (FIAB), a new body that will provide business-focused advice and leadership and oversee the activities of the investment fund management directorate of the SBS.

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The FIAB's initial role will include advising the SBS on its delivery of the pathfinder round of ECF and on implementing changes to the small firms loan guarantee programme arising from the Graham Review. The pre-budget report in December 2004 outlined the UK Government's intentions to establish a new advisory board to advise the Department of Trade and Industry's Small Business Service on running a 'pathfinder' round of ECFs, based on the US Small Business Investment Companies (SBIC) model (more information at www.sbs.gov.uk/financegap). The EU competition authorities gave the UK Government state aid clearance on 4 May 2005 and the bidding round for ECFs will commence this summer.

The government also stated that if the pathfinder round of ECF was successful, then the SBS will need to establish an arms length delivery company to manage DTI interventions in financial markets. The delivery company would then take on the duties and responsibilities of the FIAB.

Announcing the FIAB chairman’s appointment, SBS chief executive, Mr Martin Wyn Griffith said, “I am pleased that David has agreed to chair the newly created Finance for Investment Advisory Board and work with the SBS on Enterprise Capital Funds and the Small Firms Loan Guarantee. David has an excellent reputation from his long career as a venture capitalist and most recently as chairman of Abingworth Management. I’m sure he will make a very significant contribution to the way we operate across the portfolio of SBS’ investment into the SME market.”

David Quysner said, “I am delighted to accept this position. The Enterprise Capital Funds and the improved Small Firms Loan Guarantee will strengthen the existing SBS portfolio and make an important contribution to the availability of funding for SMEs. I'm glad to be getting involved at the start of these programmes and to be working with the SBS to ensure the portfolio is managed effectively and efficiently.”

Quysner has several roles currently: as chairman of Abingworth Management Limited, a fund management company specialising in life sciences and with circa 40% of its $700m funds under management invested in UK-based businesses; as non-executive chairman of Comino Group plc, which produces software for local government and housing associations; in Finsbury Technology Trust plc, a technology investment trust investing in quoted companies; and Quester VCT3 plc, a venture capital trust.

In addition, he holds non-executive director positions with Angle plc, a consultancy and seed investment company principally involved with intellectual property emanating from UK and US universities); Prelude Trust plc, a technology investment trust; and Private Equity Investor plc, a venture capital fund of funds.

Quysner is a past Chairman of the British Venture Capital Association and previously worked at 3i where he was the director of the Manchester regional office managing investment activities in the north west.

The Chilli perspective
This is a welcomed appointment of an experienced chairman, and depicts further progress to the UK pilot programme. We hope that the new advisory board will take into account the wishes and desires of the technology entrepreneur community – especially the fact that the ECF programme should not limit itself to some arbitrary figure for maximum investment in order to avoid competition with existing players. The worst thing that can happen now is that the programme limits itself into a ‘me too’ fund for fear of competing with similar size funds and in its degree of risk taking compared to established angel, VCT and RCF funds – which all have limited scope and risk aversions.

The final make up of the ECF funds is keenly awaited, and it would be interesting to see if there will be strong take-up from angels and HNWIs (high net worth individuals).

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