The enterprise capital funds or ECFs are types of business funds, which invest a combination of public and private money in small and medium scale businesses, which have an exponential growth rate and are searching for risk capital. Enterprise capital funds are considered as useful instruments for bridging the equity gap.
About Enterprise Capital Funds
Currently the enterprise capital funds (ECFs) are getting more and more impetus in the United Kingdom.
In the United Kingdom, these entities are launched to deal with a market defect in the supply of equity financing to small and medium scale enterprises. In this context, government financing is utilized alongside funds in the private sector for building funds, which function inside the equity gap.
The range of investments sometimes goes up to the extent of 2 million pound sterling. These investments have the capacity of generating a significant yield.
In the year 2006, five enterprise capital funds were introduced in the United Kingdom and there was a significant amount of government investment. In addition, three more funds were granted the enterprise capital fund status in the year 2007 and are going to be introduced in 2008.
The enterprise capital fund can be described as being similar to the SBIC (small business investment companies) funds pattern in the United States. These types of funds specifically concentrate on seed level financing.
New Enterprise Capital Funds Introduced in the United Kingdom
The new Enterprise Capital Funds that have been declared in the United Kingdom are the following :
The Midlands Enterprise Capital Fund: This fund has government financing as a major constituent and it emphasizes on investing in the Midlands area. However, opportunities all over the United Kingdom will be taken into account.
The Dawn Capital Fund:This fund also contains government financing and it has been formed by a team of accomplished enterprisers and knowledgeable fund managers.
These funds are supported by government financing and have been designed to assist forward-looking SMEs (small and medium scale enterprises) avail the funding they require for their development.