Draper Esprit to invest $100m in European seed funds

16 Oct 2017

London. Image: S Borisov/Shutterstock

The effects of Brexit are already being felt in the UK as vital EU funding is put on ice.

As uncertainty over Brexit gathers pace, venture capital (VC) firm Draper Esprit has revealed plans to invest $100m (£75m) in 20 seed funds across Europe over the next five years.

The VC giant has already committed to invest in two UK seed funds that have missed out on vital EU supports.

It emerged this morning (16 October) that publicly listed Draper Esprit will invest in the latest funds of Seedcamp and Episode1 Ventures. Seedcamp is an early investor in start-ups TransferWise and Revolut, while Draper Esprit is already an investor in two crowdfunding players, Crowdcube and Seedrs.

Brexit tensions rise

The investment in Seedcamp and Episode1 Ventures is quite telling as it shows that a large hole has emerged in the UK funding scene as the European Investment Fund (EIF) has paused supports following the UK’s triggering of Article 50 in March.

This is significant when you consider the EIF invested €2.3bn in 144 UK-based VC firms between 2011 and 2015, accounting for more than a third of investment in such firms in that period, according to the Financial Times.

The UK government recently announced it would provide an extra £400m to the British Business Bank for investing in VC firms.

It is understood that the EIF, a subsidiary of the European Investment Bank, said that it needs to do more due diligence before making new investments. It has denied any moratorium on activities in the UK.

Last year, Draper Esprit raised £100m in a dual listing in Dublin and London. In June, the company revealed it had raised around £160m to invest in “forward-thinking and innovative” European businesses despite Brexit fears.

It is understood that the UK treasury is currently carrying out a consultation on best ways to support young, innovative UK businesses following Brexit, including the potential creation of a national investment fund.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years