UK tech investor shunned by EU fund secures backing from British Business Bank


The British Business Bank has stepped in to support a new technology fund after the EU’s investment agency denied it cash in the wake of last year’s Brexit vote.

Episode 1 Ventures, an early-stage tech investor set up by Simon Murdoch, the entrepreneur who launched Amazon in the UK, has raised £60m to launch its new fund.

It had originally applied to the European Investment Fund (EIF) for support, but was frozen out along with a number of other British tech investors this year after the Government triggered Article 50.

The EIF, which is majority owned by the European Investment Bank, is a major source of funds for British venture capitalists, but has “paused” funding in recent months, despite Britain remaining in the EU and continuing to contribute to its budget.

The British Business Bank (BBB), which has contributed £36m of the £60m fund, is expected to play a key role in UK tech investing after Brexit. The bank, set up under the Coalition to encourage investment in early stage companies, saw its funding boosted by the Government at last week’s Budget.

The extra £2.5bn it has been given to invest is forecast to help plug the £2bn a year that the EIF has invested in UK venture capital funds in recent years. The European fund has said it will continue to support existing funds but paused approvals of new cash during the Brexit negotiations, and some expect it to stop completely.

“Certainly [the loss of support] is something that’s being addressed, the pace of investment [from the BBB] will accelerate now which is great,” Mr Murdoch said.

It is Episode 1’s second fund after it raised £37.5m in 2013, which was also supported by the BBB. The firm focuses on “seed” investments of between £500,000 and £2m and has backed companies such as online vehicle marketplace Carwow and hotel website Triptease.

Others investing in the fund include Draper Esprit, the listed tech investor, and ADV.

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