Noble raises £100m for venture debt fund

The firm’s fundraising for its second venture debt fund has closed with commitments from all of its debut fund’s investors.

Noble Fund Managers has held the final close of its second venture finance fund reaching its target of £100 million (€127.6 million; $197.7 million), according to a statement.  The fund is more than twice the size of the firm’s debut fund raised in 2003.  Including re-investment, the fund will be able to deploy up to £350 million.
All investors in the firm’s first fund participated in the fundraising. Arch Group, a UK financial services firm joined the fundraising. The fund will provide debt and working capital finance of between €1 million and €10 million to venture capital portfolio companies across Europe.

Noble’s first Venture Finance Fund has committed more than £40 million to 20 companies in eight European countries.  In April the firm exited one of its investments, Complinet, the financial services information provider, generating a minimum internal rate of return of 25 percent. The firm’s second fund has also invested in Complinet.

The second fund has committed £27 million in 13 loans to 8 companies. Its investments include a €6 million ($9.3 million) facility in January to The Cloud, a European mobile wireless broadband service provider, and a £3.5 million facility to Artimi, the UK developer of wireless connectivity for portable consumer electronic devices.   
Mark Taylor, head of Noble Venture Finance, said the decision of larger firms to eschew early stage investment was good for his business because it reduced the supply of capital targeting smaller venture investments. “Its inevitable the 3is and the Apaxs move up the food chain. As you raise bigger funds it’s difficult to not move up in size. We find it very difficult to do anything below €500,000,” he said.

The fund provides finance in the form of loans, leases or hire purchase facilities, across multiple tranches. The firm also receives equity rights, typically through warrants.
Taylor set up Europe’s first venture debt fund for Dresdner Kleinwort Benson in 1998, according to the statement.

At Dresdner, Taylor said he was able to avoid the worst excesses of the venture bubble. “We didn’t have too many problems because we started investing in 1998 and we were focussed on asset rich companies. We are seeing a lot of those businesses coming back now with realistic valuations. They’ve got past the hype and investors have been through it before. The funds we’re dealing with are all people around 10 years ago.”