Bridges makes case with target-topping fund(3)

Bridges Ventures, a venture capital firm with a social mission, has closed its second fund on £75 million, almost double its first effort, after proving its cause to investors.

Socially-minded venture firm Bridges Ventures has raised £75 million ($147 million, €110 million) for its second fund, 25 percent above its hard cap of £60 million.

Unlike Bridges Ventures’ £40 million first fund, which was invested in by the UK government Department of Trade and Industry, the fund received no public sector support. The amount raised triples the £20 million private sector investment in the previous fund in 2002.

Michele Giddens, a director at the firm, said: “We have shifted mindsets with the first fund. It has broken down traditional notions, which were to maximise wealth and then to give it away in philanthropy. We have shown you can achieve social impacts and good returns.”

She said the firm had confounded sceptics although fundraising was still tough because investors found it difficult to know where to put it in their books.
 
Investors in the fund include numerous banks and financial institutions such as HSBC, pension funds, All Souls College, Oxford, buyout firm 3i and Jon Moulton, founder and managing partner of Alchemy Partners.

Philip Newborough, chief executive of Bridges, said “We have been successful for two reasons. We have recruited a fabulous team, who want more than to make pots of money, and our investment strategy is sound.”

He said the firm was like any venture capital firm but for the social screen it applies to investment opportunity. The business must help deliver economic and social regeneration to the most deprived 25 percent of the UK or it must show a strong social benefit in the areas of healthcare, education or the environment.

Bridges has had three exits to date, label business Harlands of Hull, sold to packaging company Clondalkin Group for £8.5 million with a money multiple of 3.5 times; as well as the sales of lorry parts supplier HS Atec and price comparison service SimplySwitch, its most successful deal to date, generating 22 times the original investment.

SimplySwitch also underlines the firm’s social project neatly. The site also raised £500,000 for its partner charities and created 80 jobs mostly taken by unemployed women of minority ethnic origin.

Newborough, however, said it was important not to judge the firm’s social return on a single investment. It was important to look at the aggregate effect, including of course, five write-offs of early stage investments. The first fund is still around 50 percent up gross, before fees.

Bridges Ventures has so far carried out 24 investments, balanced in terms, risk and stage.

Additional reporting by Toby Lewis