Cornerstone VC holds GBP 20m first close for debut fund

Fundraising began in January 2021 and a final close is expected mid-2023, Rodney Appiah, co-founder and managing partner at Cornerstone Partners, told Unquote.

The sponsor, which did not use placement agents during the fundraising period worked with RW Blears LLP and The Fund Incubator Limited. Macfarlanes LLP acted for BGF and Proskauer Rose LLP acted for Hg Foundation.

Cornerstone VC's diversity led investment strategy will target management teams with inherent diversity, such as age, gender or ethnicity and acquire diversity-social capital in order to address the equity funding gap for entrepreneurs "that are too often overlooked and underestimated by the wider funding community," said Appiah.

The ten-year life fund will focus on tech-enabled businesses typically investing initial cheques of between GBP 250,000 and GBP 1m with 30-40% of capital being reserved for follow-on funding, said Appiah. A two-year extension of the fund is possible but will be optional, he added.

Investors
The fund's founding LP base currently comprises anchor investor BGF, the UK-based growth capital firm. Grand-provider, The Hg Foundation, backed by software investor Hg, Senior Hg Partners and European VC fund Atomico, made meaningful commitments, according to Appiah. Other investors include Nic Humphries and several senior partners from Hg, a software and services investor, as well as other individual investors including former BVCA Chair Neil Macdougall, Scott Mackin, Jamie Broderick, Stefan Ericsson and Sidumiso Sibanda.

The fund has a traditional structure with standard economic terms and Cornerstone's angel network will also receive a share of the fund's profits via carry participation. The minimum LPs commitment is GBP 50,000, said Appiah.

"Our angel group which is a private syndicate of sophisticated retail investors will continue to make investments at pre seed and is essentially our Fund 0," said Appiah.

Investments
The fund plans to invest in up to 40 companies with a significant proportion based outside of London. "We will be primarily focused on regions where there is an over indexation of diverse led businesses," said Appiah. Target regions include Manchester, Birmingham, Edinburgh, Bristol, Cambridge, Oxford, Cardiff and Yorkshire. The fund will make approximately seven to nine investments per year, according to the co-founder.

The vehicle, which has not yet made investments, aims to complete "a handful of investments before the end of the year," said Appiah. "We will invest across supply chain and logistics, PropTech and infrastructure, healthtech and CleanTech." Investments are set to target enterprise software, data and security, fintech, payroll, HR and communications, as well as vertical eCommerce, networks and marketplaces, web 3.0. social, Adtech and Martech, he said.

Cornerstone VC is keen to co-invest with its seed stage VC firms and has already co-invested through its angel group at pre-seed, alongside Playfair Capital, Local Globe, Ada Ventures, Redrice, Ascension, Atomico, amongt others, said Appiah. Previous investments out of the angel group include Passionfruit, which recently raised USD 4.3m, By Rotation, which raised GBP 2.6m, Moonhub, which recently raised USD 2.6m led by Pi Labs and Stack World.

The fund is led by Rodney Appiah, founder and managing partner, alongside partners Edwin Appiah and Wilfred Fianko. Rodney, who co-founded Cornerstone Partners in 2016, is a non-executive director of UKBAA and Conduit Connect and was formerly an investor at BGF and Foresight Group. He has served as a committee member for Lloyds Banking Group's Black Business Advisory Committee, Innovate UK's Credit Committee and the London Chamber of Commerce and Industry's Black Business Association. He previously chaired the CBI's London Under 35 Committee.

Edwin Appiah serves as an IC member of Imperial College's Enterprise Fund and was a former International Banker at Coutts. Fianko is a board observer at an LSE Listed Private Equity firm in the UK and was formerly a senior management consultant at UBS and KPMG, specialising in financial services transformation.

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• Topics
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• UK / Ireland
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• Cornerstone Capital AG
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