How this UK-based VC fund has backed 100 high-growth companies in less than 10 years
The UK venture capital fund, ACF Investors, that works alongside sector expert business angels to invest in high potential businesses, has marked a new milestone as it crossed 100th company investment. Launched in 2011, the company (formerly the Angel CoFund) has come a long way. In a tete-a-tete with UKTN, Tim Mills, Managing Partner of ACF Investors, talks about the company’s decade-long support to fast-growing businesses, its commitment to regional development of startups across UK and how the angel-partnership investment model is driving growth in the UK.
Landmark 100th investment
ACF Investors reached the latest milestone with the completion of three new investments, which are representative of the fund’s unique investment model across sectors and geographies. Kuano.ai which is a London-headquartered software platform for rapid, cost-effective quantum modelling of enzymes adds to ACF Investors’ growing Medtech portfolio. On the software side, Scene Group, the Manchester-based creator of animation software Cavalry, which was backed by mobile games entrepreneurs and founders of Playdemic, Paul Gouge and Alex Rigby, and Scotland-based SnapDragon Monitoring, an online brand protection business, which demonstrates the wider reach of ACF Investors across the UK.
Co-investing with ‘sector smart’ investors
Talking about how the journey has been for ACF and evolution of its growth strategy, he reminisces: “ACF launched in the aftermath of the credit crunch, and the investment landscape was a little bleak at that time, but with some clear indicators that exciting things could happen. Working with a range of partners who wanted to see the angel eco-system thrive and back great UK companies, such as British Business Bank, the fund set out to co-invest with individual investors with deep sector knowledge and complement them with significant amounts of capital. In essence, the idea was to give smart money more influence and ensure companies beyond the usual hot spots could plug into serious capital.”
The model has proved a great success, generating considerable returns and creating some of the UK’s most recognisable startups, such as the unicorn Gousto. Today the philosophy remains unchanged and the company continues to exclusively co-invest alongside angel syndicates led by a ‘sector smart’ investors, who know their industry inside out, he adds. The model has been slightly adapted to account for the increased professionalism of angel investment and overall maturity of early stage venture, which has dramatically increased over the last decade. For example, at the beginning of this year ACF launched its second fund, the Delta Fund, to invest larger amounts, faster, into startups that have already attracted a team of professional angel investors.
Portfolio of investments
ACF has a portfolio of companies such as Gousto, who have gone on to lead a new segment in food grocery for recipe box delivery, or Tevva who are leading the development of electric commercial vehicles, or Ebury which has been able displace the banks with a more efficient and customer centric offering for trade finance.
Key investment areas
The company’s model has always been sector agnostic, with the only criteria being that it invests exclusively along angels who are experts in their sector – whether that is hospitality or artificial intelligence. These sector smart angels are often first movers into emerging areas of technology, which means that we are at the frontier of the “hot” new areas. Today, those are fields such as greentech and medtech, which make up nearly half of its portfolio companies.
Talking about how VC funds have been flowing in the post-Covid scenario and new trends being witnessed in the market, especially in the UK, he adds: “One of the biggest changes to VC from the COVID-19 pandemic is the ability for companies to raise money remotely. Before the pandemic it would have almost been unthinkable to invest into a company without meeting the founders face to face but today it is quite routine for at least the initial meetings to be done this way. The full impact of this development remains to be seen but it is fair to speculate that this may increase the opportunity for companies outside of London and also change investment patterns. Angel investment in particular has historically been conducted locally, with businesses accessing angels in their immediate vicinity, so this may lead to more opportunities for both angels and early stage businesses to discover new partners.
Regional growth in the UK
Championing regional investment has been part of the fund’s remit since launch and is another part of the ACF model that has proved hugely successful. Almost half of its 100 investments have been into companies outside of London and the South East. This includes some of our most noteworthy exits such as LivingLens, a media management business which was founded in Liverpool, and the Welsh startup, Creo Medical (now a large listed business). The company has made investments into every region in the UK and in particular focus on backing startups that are capitalising on the business strengths of their region, for example, media companies in Manchester or those building on the industrial strength in Yorkshire and Humber.