VC Profile: Edge Investments

Following the successful deployment of Edge Investments' debut Creative Enterprise Fund, the venture capital firm has now set its sights on its next fund. The second-generation vehicle will target £70m for a first close and £100m for a final close, with a £120m hard-cap. Edge focuses on companies in the creative industries and associated technologies, with existing revenues of more than £1m and capital requirements of £1-5m.

The firm is expecting to hold a first close imminently and already has the support of a cornerstone commitment from the British Business Bank, which contributed to Edge's debut fund. The fund expects to have around 30 LPs. Typically, high-net-worth individuals and family offices, as well as institutions, have invested in Edge funds.

The firm's debut fund, which closed on £40m in 2015, is now 70% deployed across companies such as television production services provider Antidote and children's activities website Hoop.

Coronavirus response
Fisher told Unquote that, like most investors, the firm has been focused on mitigating the effects of the coronavirus crisis on the portfolio, dealing with various government-backed schemes such as the furlough scheme: "The existing portfolio has had some challenges, but I would say 60% of the portfolio is doing really well. I would point to both Jungle Creations and Newsflare."

Edge invested £2.4m for a minority stake in Newsflare in December 2016, in what marked Edge Creative Enterprise Fund's first investment. The company is an online video news community and marketplace for the publication and the sale of user generated video content. Fisher noted the growing prevalence of video filmed at home by consumers during lockdown in mainstream media as a positive trend for the business.

In December 2018, Edge invested in a £3m funding round for Jungle Creations, a company that commercialises food, beauty and lifestyle channels for Facebook, including VT and Twisted. Both this and the Newsflare investment were intended for international expansion.

"Some companies have been more challenged," Fisher says. "Festicket has had to cope with the postponement and cancellation of most of their live events." The firm injected £3.5m into the UK-based online event booking platform in February 2019, three months after Beringea led a $10.5m series-D round for the company.

Despite the challenges that face the portfolio, Fisher is optimistic for his sector. He says: "At every major recession, the creative economy has come out faster than the economy as a whole and continued that growth to become a larger part of the UK economy."

Creative drive
In a recent opinion piece, Fisher recounted his experience in venture capital since the dotcom era. He wrote that following the global financial crisis of 2008, the UK economy declined by 6% between the first quarter of 2008 and the second quarter of 2009, while figures from the Department of Culture, Media and Sport show that the creative sector rebounded much faster than the economy as a whole.

He says: "This is likely due to the consumer-driven elements, as the price point for participating in the creative economy is much lower than buying a car or going on a big holiday. Edge also backs companies that offer experiences and media that are significant to customers."

This sector trend may be behind the firm's recent fund launch. Fisher says of LP sentiment currently: "VC returns are typically better following a recession. Now is definitely the time to invest in the creative economy.

"There are some LPs that get venture and some that don't. The coronavirus pandemic has impacted investors' appetite to do anything, but we think the uncertainty has now lifted. It feels like we can see a new normal and people are looking to invest again."

Alongside the fundraise, Edge has also recently announced a new advisory panel. Industry professionals such as Ed Vaizey, the former Minister for Culture, Communications and Creative Industries, and Sir Peter Bazalgette, the chairman of ITV, have joined the panel.

Advisers will be expected to engage in one or two adviser panel meetings a year and to give around three to four hours of advice to portfolio companies a month. "Beyond those stipulations, it's up to the advisers and the portfolio companies," says Fisher. "They could take a chair role for example."

In conjunction with the developments at Edge, the firm is also very much in the market to invest further. Says Fisher: "We're currently looking into making further investments. We expect one to close imminently. We sent several term sheets out to companies over the lockdown period. We've found it quite easy to keep working."

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