Frequently Asked Questions
Below is a list of our Frequently Asked Questions, along with answers. We hope you find them useful.
- Who is Midven?
- Why was Midven established?
- What type of funding does Midven provide?
- What type of company is likely to be an attractive investment for Midven?
- What is Advantage West Midlands' involvement?
- What are the Fund's investment criteria?
- How much venture capital investment can Midven provide?
- Are there any sectors the Fund cannot invest in?
- Who makes the decision as to whether you will invest in my company?
- How does a company apply for funding at Midven?
- Is the information provided kept confidential?
- What are the timescales to investment?
- Where can I find co-investment?
- Is Midven regulated by the FSA?
- What purposecan the company apply the investment?
- Is Midven independent of the Government?
- What returns is Midven looking for?
- What is the expected time period between investment and exit?
- Do I need a business plan?
- Who are the investors in Midven Funds?
1. Who is Midven?
Midven is a long established management owned venture capital investor located in Birmingham. We have extensive experience and a proven track record of investing in SME's and early stage businesses.
2. Why was Midven established?
To provide venture capital investment to SMEs within the Midlands region that are typically young well managed businesses with high growth potential.
3. What type of funding does Midven provide?
Midven is a venture capital investor and will therefore always take an equity stake in the companies it supports. The investment will typically comprise of a mixture of ordinary shares and either redeemable preference shares, sub-ordinated loans or quasi equity instruments. We do not provide grant funding.
4. What type of company is likely to be an attractive investment for Midven?
Companies suitable for funding would ideally :
- be growing rapidly and /or serving a growth market.
- be capable of achieving sustainable growth in profitability and should have profit potential of at least £250,0000 pa.
- have a strong management team.
- have a defensible market position or intellectual property and be robust to economic downturn.
- be capable of achieving an exit, probably by trade sale, within 5-7 years.
We do recognise that not all companies seeking investment will initially meet all these criteria but this does not necessarily preclude us from considering the proposition as we may be able to help fill the gaps.
5. What is Advantage West Midlands' involvement?
Advantage West Midlands is the Regional Development Agency for the West Midlands and has provided considerable assistance and funding to help the establishment of a number of Midven Funds. The funds and Midven, the manager of the funds, are separate legal entities independent of Advantage West Midlands and take investment decisions independent of Advantage West Midlands.
6. What are the Fund's investment criteria?
See the specific criteria within each of the individual funds, in general however the company should:
- be based in Warwickshire, Worcestershire, Herefordshire, Staffordshire, Shropshire or the Metropolitan Borough of the West Midlands (Birmingham, Coventry and the Black Country);
- be a small or medium sized business, which means up to 250 people employed, turnover not exceeding Euros 40 million and net assets of no more than Euros 27 million;
- be either an established business with growth potential, or a start up business with exceptional growth potential;
- have a strong management team;
- be capable of achieving a sustainable competitive advantage;
- have a business with a well defined strategy, capable of achieving capital growth and an exit for investors within 5 to 7 years;
- be in a growth rather than declining market;
- have a business which is robust to economic downturn;
- not fall within the DTI's excluded sectors. These are as follows:
- dealing in land, commodities, futures, shares, securities or other financial instruments;
- dealing in goods (other than in normal wholesale or retail trades);
- banking, insurance, money lending, debt factoring, hire-purchase financing and other financial activities;property development;
- farming, forestry or market gardening;
- operating or managing hotels or nursing or residential care homes;
- not fall within the definition of 'Restricted Sectors' referred to in Article 32 of the EC Treaty. These include, among others, certain agricultural and food related sectors and other sectors of which examples are synthetic fibres and yarns, motor vehicles and certain heavy industrieshe initial investment will be up to a maximum of £500,000. Further investment of upto £250,000 (again fund dependant) can be made 6 months after the initial investment. Thereafter we have the capacity to make further investments alongside other larger investors.
7. How much venture capital investment can Midven provide?
The initial investment can be up to a maximum of £500,000 depending on which fund we consider is appropriate to invest from. Further investment of upto £250,000 (again fund dependant) can be made 6 months after the initial investment. Thereafter we have the capacity to make further investments alongside other larger investors
8. Are there any sectors Midven cannot invest in?
Yes, the Department of Business Innovation and Skills excluded sectors, which are as follows:
- dealing in land, commodities, futures, shares, securities or other financial instruments;
- dealing in goods (other than in normal wholesale or retail trades);
- banking, insurance, money lending, debt factoring, hire-purchase financing and other financial activities;
- leasing or letting assets on hire, except in the case of certain ship chartering activities;
- providing legal or accountancy services;
- property development;
- farming, forestry or market gardening;
- operating or managing hotels or nursing or residential care homes.
It is also important that investments do not fall within the definition of 'Restricted Sectors' referred to in Article 32 of the EC Treaty. These include, among others, certain agricultural and food related sectors and other sectors of which examples are synthetic fibres and yarns, motor vehicles and both of our funds has an investment committee made up of members of Midven's Board of Directors and investment teams. Investment decisions are the sole responsibility of the relevant Investment Committee and not subject to any outside influence.
9. Who makes the decision as to whether you will invest in my company?
Each of our funds has an investment committee made up of members of Midven's Board of Directors and investment teams. Investment decisions are the sole responsibility of the relevant Investment Committee and are not subject to any outside influence.
10. How does a company apply to the fund?
Contact us directly by phone on 01217101990 or email us at enquiries@midven.co.uk. We can give you initial feedback. However we are unable to process an application for investment until such time as we have received a business plan . For help with your business plan click on the Business Plan Advice box above.
11. Is the information provided kept confidential?
Yes. Midven are authorised and regulated by the Financial Services Authority (FSA) and are bound by all FSA confidentiality rules. However, we are happy to enter into most standard confidentiality agreements if you so wish.
12. What are the timescales to investment?
A typical process and timescale prior to investment is as follows:
- Initial Contact (Weeks 0-1)
Initial contact may be made via your business adviser or by telephoning us directly. Typically a
after the initial enquiry you will send us a business plan.
- Assessment (Weeks 1-3)
If your business plan and application meets our criteria we will arrange a meeting with you
and / or your business adviser. We will undertake initial due diligence.
- Negotiating an investment (Weeks 3-5)
If we wish to proceed we will provide you with details of the terms of a possible investment. If you agree with these terms we will seek approval for an investment from our investment committee. - Formal Offer Letter (Weeks 5-6)
If the investment is approved we will make you a formal offer.
This will be subject to various terms and conditions that need to be satisfied prior to completion.
We will ask you also to complete an investment questionnaire which , in due course, will form part of the legal documentation. - Legal process (Weeks 6-10)
If you accept our offer we will put in place legal documentation including Shareholders Agreement, amendment to the Articles of Association and directors' service agreements. - Due diligence (Weeks 6-10)
We will undertake further due diligence including references, accounting investigation and obtaining market reports if appropriate. - Completion (Week 10)
Legal completion with funds invested.
No two investments are the same and some cases may take longer or shorter to complete than indicated. We will keep you informed as to where we are in our process. If at any stage we decidenot to proceed then we will let you know as soon as is practicable.investment can be applied for the purposes which have been agreed between us, details of which would be contained in the business plan.
13. Where can I find co-investment?
Midven has good relationships with a range of business angel networks and other venture capitalists. We are happy to make introductions as appropriate. Also Advantage West Midlands has a range of grants, loans and venture capital initiatives which are listed on their website
14. Is Midven regulated by the FSA?
Yes. Midven is authorised and regulated by the Financial Services Authority. (reg no 148549)
15. For what purpose can the company apply the investment ?
The investment can be applied for the purposes which have been agreed between us, details of which would be contained in the business plan.
16. Is Midven independent of the Government?
Yes. It is a limited company owned by members of its investment team.
17. What returns is the Midven looking for?
We manage commercial funds, and when we invest in companies we are expecting that the investment will provide the Fund with a commensurate return for the risk taken. Returns include interest, dividends, capital repayments and the amount realised on selling the Fund's equity stake in the company. The level of return we seek varies from investment to investment dependant on our assessment of the risk profile of the proposition.
18. What is the expected time period between investment and exit?
Midven is generally a patient investor but each of our funds has a fixed life within which we have to make returns to our investors. As such we will agree on exit timetable with you early in the investment process and work with you to ensure that the company's strategy is aligned towards achieving this.
19. Do I need a business plan?
Yes. See the Business Plan section of our website for information that should be included in it.
20. Who are the investors in Midven's Funds?
- Department for Business Innovation and Skills
- European Investment Fund
- HSBC Bank
- Royal Bank of Scotland
- Lloyds Develoment Capital
- Barclays Bank
- Aston University
- Birmingham University
- Birmingham City University
- Coventry University
- Warwick University
- Midvest (a subsidiary of Midven)
