Mills & Reeve advises IQ Capital Partners on their new £60m Enterprise Capital Fund

Leading national law firm Mills & Reeve has advised fund manager, IQ Capital Partners LLP, on the creation of the IQ Capital Fund II LP (IQ Capital Fund II).

IQ Capital Partner’s predecessor fund, IQ Capital Fund I LP, on which Mills & Reeve also advised, was one of the UK’s first £25 million Enterprise Capital Funds (ECF). ECFs are commercially focused funds which combine private and public money to make equity investments in high growth businesses in the UK. So far under the ECF programme, now managed by the British Business Bank, over £200 million has been invested in 169 fast-growing UK businesses. The IQ Capital Fund II is the first fund to be awarded the new ‘enhanced class’ of ECF and will be able to make investments of up to £5m into portfolio companies, well above the previous ECF limit of £2m.

IQ Capital Partners creates a solid collaboration with founders and other investors through the model of investing alongside sector experts and entrepreneurs ‘IQ Angels’, who have previously managed and achieved significant exit success with innovative technology companies. These IQ Angels, endorsed by the portfolio companies, work in partnership with IQ Capital Partners and the company founders to provide connections and constructive strategic advice throughout the various growth phase hurdles and to provide a great sounding board for CEOs through open discussion and sharing of their previous experiences.

The fund invests between £1-5m in innovative, fast growing UK technology and B2B companies, including SaaS and PaaS, IoT, digital media, enterprise software, robotics and med-tech. The team – Ed Stacey, Kerry Baldwin and Max Bautin – has delivered significant returns to investors since 1997, including Autonomy (IPO), Sirigen (sale to BD Biosciences), Phonetic Arts (sale to Google), KVS (sale to Veritas), JCP (sale to Sun) and Whereonearth (sale to Yahoo) and draws upon a diverse range of investment experience to generate excellent returns to investors.

IQ Capital are continuing to fundraise and are targeting a second close of a further c £20m to bring the fund to £60m in total and are open to building relationships with new ‘IQ Angels’ who have a deep understanding of a specific technology.

The team advising on the investment round was led by corporate finance associate, Dona Ardeman, supported by corporate partner Claire Clare and assisted by corporate solicitor, Geraldine Spencer and corporate tax partner Christopher Townsend.

Max Bautin said “the successes of the IQ Capital Fund I demonstrated our ability to identify, back and work with world class businesses led by world class management teams. I am delighted to have the opportunity to continue to grow and strengthen our portfolio through IQ Capital Fund II. Mills & Reeve’s expertise and strong track record in fund creation and structuring was, once again, vital in helping us to successfully achieve our first close.”

In response Dona Ardeman said “it was a pleasure to work with this dynamic fund management team on their latest ECF fund. We are very much looking forward to working with the team as they start putting the money to work in exciting and innovative fast growth technology businesses. Investment funds such as IQ Capital Fund II are crucial to providing the much needed equity gap funding and growth capital required by many growing business in these challenging economic times. We wish IQ Capital every success with their portfolio investments out of this new fund.”