UK’s NESTA pulls in private sector expertise to invest its new GBP50 million fund

The UK’s public sector innovation body NESTA (National Endowment for Science, Technology and the Arts) announced that its new GBP 50 million fund is to be overseen by a team of private venture heavyweights.

The move reflects CEO Jonathan Kestenbaum’s desire to bring a commercial ethos to the way NESTA’s public funds are invested.

The fund, worth around GBP 10m a year, will be formally opened in early 2007, targeting promising, early stage innovative companies that are struggling to attract seed finance.

The fund will invest between GBP50,000 and GBP150,000 initially, with an option to invest up GBP500,000 in later rounds. In addition, companies will also receive mentoring and support from NESTA.

The committee’s combined experience reflects the fund’s focus on investing in and supporting early-stage companies in ICT, healthcare and environmental technology.

"This fund seeks both to help tomorrow’s innovators move forward and, by focusing on commercial viability, to act as a trailblazer for the private sector, highlighting the benefits of early investment," said Kestenbaum.

NESTA says the fund will play a distinctive role in the early-stage investment community - not only looking for returns, but also for leveraging co-investment relationships with private funds.

In another investment innovation, NESTA said it will for the first time, invest money in other funds, as well as its direct investment in new ventures. This will enhance the organisation’s capacity to support innovation at the very earliest stage and will help encourage further investment at this stage of the cycle.

NESTA claims its investments have already helped attract private finance into new ventures. Since 2003 every GBP 1 NESTA has invested has attracted GBP 5 of private capital.