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Advantage Creative Fund

Advantage Creative Fund was set up in 2003 as one of the first venture capital funds dedicated to investing in the creative industries. Advantage Creative Fund is a limited company led by a non-Executive Board of Directors. The staff team includes Fund Manager, Investment Manager, Business Development Executive, and a flexible team of Associates who are engaged on a freelance basis.

The Fund was initially financed by grants from Arts Council England, Advantage West Midlands and ERDF funds granted through Government Office for the West Midlands, and is managed by Advantage Creative West Midlands Ltd trading as Advantage Creative. The Executive Team provides updates to the funders on the performance of the Fund and investees businesses. 

Advantage Creative Fund processed 877 applications from Creative Industries SMEs in the West Midlands. The Fund made 81 investments of up to £250,000 into 55 creative industry companies in the West Midlands, investing £5.4m in total, and currently provides ongoing business support to a number of these investee businesses, some of which are included in our case studies.

It is operated as an evergreen fund, such that returns on investment are re-invested in the creative industries in the West Midlands. Advantage Creative Fund has been cited in a number of different publications as an example of best practice in Creative Industries business support and funding programmes.

Investee businesses cover the length and breadth of the creative industries; from film production to animation studios, orchestras to software companies, from television to new media businesses, and include some high profile companies such as Maverick Television, Jan Constantine and Warwick Music

Background

Advantage Creative Fund (ACF) was setup in 2003 as one of the first venture capital funds dedicated to investing in the creative industries, following on from a successful £1.3m pilot fund, Creative Advantage Fund (CAF), which was fully returned over 7 years. Our Fund Manager co-managed this pilot project, which was financed by Arts Council England, Government Office for the West Midlands (ERDF grant), Birmingham Venture Capital Company, and a wide range of public and private investors.

Both CAF and ACF were set up as Community Development Venture Capital Funds with a double bottom line: making commercial investments in creative businesses to grow the regional creative industries sector; and meeting an area of private investment market failure.

Advantage Creative received 877 statements of interest and assessed 319 business plans. The Fund assessed the business plans of 36% of all enquiries and made investments in 17% of the companies that submitted full business, making a ratio of business plans received to investments made of almost 6:1. This relatively high conversion rate reflects the business support and investee readiness the Fund provided at pre-application stage, and the niche focus of the Fund. The Fund committed or invested all of the monies available by June 2008, six months ahead of schedule.

The Portfolio

ACF invested into 25 start-ups and 30 expanding businesses.

The average investment size was £66,700, with the majority of investments being between £25,000 and £100,000.

18 Investments were made at £25,000 or below.

18 investments were made at £50,000 - £100,000.

9 investments were made at £100,000 - £200,000.

10 investments were made at £200,000 - £300,000.

Investments were made in a wide range of creative sectors, with a significant number made in design businesses, corresponding with the high level of enquiries from this sector.  Interestingly, the same correspondence does not occur with the music sector.  The design category, however, has a broad definition including ceramic ware, textile design and innovative glass shop front design. The fund made 5 equity investments in the performing arts sector, which is normally more closely associated with grant funding.

Investments-by-Sector.jpg#asset:227


Impact

Advantage Creative Fund has been the subject of two reviews.  The first, in 2006, was carried out by Regeneris on behalf of DCLG as part of a review of VCLFs nationally.  The second was in 2008, carried out again by Regeneris on behalf of Advantage West Midlands (AWM) as part of a review of the Access to Finance initiatives part funded by AWM.  The two reviews measured the ACF against different targets. The first review by DCLG focused largely on the economic development outputs achieved by ACF.  The second review focused largely on the financial returns achieved by ACF.

Advantage Creative Fund levered a further £5.851m of private funding into the sector, and performed well against the economic development targets set by public funders.

Outputs

Grand Total at 30/06/09

Overall Target

Number of Investments made

81

56

New businesses created

22

28

New Jobs created

320

140

Jobs safeguarded

210

140

 

 

 

 


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