Published in the Ulster Business February 2012 Edition
Crescent Capital is hoping its third fund will go live by the end of the second quarter this year. The Northern Ireland based fund manager told Ulster Business it is currently working to attract private investors in a bid to get the fund to the point of launching. Crescent is Northern Ireland’s largest venture capital fund manager and has previously operated two funds backed by both private investors and Invest NI, which have supported the growth of successful companies such as Andor Technology, APT and Lagan Technologies.
Its first fund was valued at £14m and its second at £22m, the latter of which allowed a maximum investment of up to £1.5m in any one deal.
While Invest NI has never announced it formally, it is well known in the market that Crescent won the tender to manage its new venture capital growth fund in the early part of 2011. Crescent’s goal is to raise a £30m fund, backed by £10m of subordinated funding from Invest NI, money that gives private investors a safety net against potential losses.
Managing Director Colin Walsh said the fund has not been launched sooner because it has become harder to get private investors to commit to the third fund. Because of the economic environment investors are more nervous and are directing funds to the perceived safety of the global brand names in the venture capital market.
“The private investor market is the toughest I have known since 1989 – which was obviously after the crash in 1987. We launched our other funds at good times in the economic cycle, but now we are attempting to get funding at the bottom of the cycle,” he said.
“If we closed the fund tomorrow there are investments we could do right away.” Walsh said Crescent is hopeful the fund will again have input from some wealthy private individuals and Northern Ireland’s two universities, and it is aiming to secure a share of the money allocated to international activities by the New York State pension fund.
With investors taking longer to make decisions about where to deploy funds, Crescent’s investment manager Hal Wilson said the fund would go live in May or June at the earliest, though more likely September or October.
“We’ll never get better pricing on deals than we would today but that on its own is not enough to attract investors. Once the fund is real we will be able to attract other investors,” he said. For the past 18 months Crescent has focused on follow on funding rounds with companies it had previously invested in and preparing companies it might invest in for the venture capital process. Walsh said that with little activity of any scale among other venture capital funds in Northern Ireland it is imperative to have new funding available to companies.
“In Northern Ireland we are short of equity provision at every level of the cake,” he said. “Northern Ireland plc needs the investment. The 25 companies we’ve supported over the two funds support close to 2,000 jobs directly and in their supply chain. These are mostly higher value jobs, mostly in the knowledge based economy which is virtually totally export based. That’s a huge benefit to the economy.”