Business Weekly - Cambridge, UK

There is fantastic news for the region at the opposite extremes of the funding scale but it is the centre ground that is giving way under the feet of the region’s budding entrepreneurs.

Hermann Hauser’s Amadeus Capital Partners is well on course to raise a third fund of £160m from international investors – an incredible achievement against arguably the toughest ever backdrop.

And at the smaller end of the scale, a new, £25m US-style fund is to be managed by NW Brown in Cambridge.

The IQ Capital Fund has been launched by the DTI to both encourage more high net worth individuals to become business angels and bolster their investment power by co-investing alongside them.

While business angel networks are straining every sinew to fill the void, seasoned investors tell Business Weekly that they have serious fears for young tech businesses trapped in the gap.

They may be too small and therefore just off the radar for the 3i’s and Amadeus funds and their biotech equivalents, not equipped for IPO and too risky for angel funders.

Investors who prefer not to be named say a lot of promising technology businesses will go to the wall unless the problem is solved.

Amadeus raised £235m for Amadeus II in 2000 and is still making some investments from the residue of that fund.

Now we can exclusively reveal that it is well over halfway to raising Amadeus II at a staggering £160m.

While other funds have faltered or given up, Dr Hauser’s has continued to attract global investment.

It is believed to have already raised around £90m.

One senior financier told me: “It is damned hard raising this kind of sum at the moment and we don't see it getting any easier at present – unless you happen to be a buy-out fund.”

TTP Ventures, based in Melbourn, has discovered exactly how tough.

Having ambitiously announced it was targeting an £80m fund, it has had the wind taken out of its sails and has had to revise the timescale.

But Gerry Fitzsimons, who heads up the fund, said that it had most definitely not been abandoned. “We expect to be fundraising later this year,” he said.