ECF operators will be required to provide regular reports to CfEL on the progress of their fund and its investments. The Government is additionally interested in the impact of ECFs upon equity gap investments into SMEs. Therefore the ECF will be expected to provide some additional reporting on SMEs seeking investment. The Government intends that this should not be particularly burdensome and believes it is best achieved through the completion of an “Investee Summary Sheet” described below. All SMEs seeking investment from an ECF will be required by the ECF manager to submit this information regardless of subsequent investment. This additional information will support future evaluation of the ECF programme and the Government‟s analysis of the equity gap.
A business seeking investment from an ECF will be required to provide the ECF with an
Investee Summary Sheetcontaining:
Company Name Company Postcode
Management Team (listing names, years in sector and previous business ownership) Companies House Company Registration Number (CRO), or VAT Registration Number Product/Service description and 4 digit Standard Industrial Classification (SIC) code(s) Date of inception / start up
Current Revenues (dated)
Guidance for Prospective ECF Managers
Number of full time staff at time of application Company plans for the new capital
Notice that the Government or its agent may contact company the company for evaluation purposes
Agreement that a (non confidential) summary of the company‟s business plan may be used for evaluation purposes
The ECF will be expected to follow the International Private Equity and Venture Capital Valuation Guidelines produced by EVCA14 when valuing investments and will be required to produce quarterly reporting following the BVCA reporting template15. This will cover summary fund data and more detailed portfolio reporting for all investments, including details of investments bought and sold in the period, brief updates of the progress of each portfolio company, valuations of each investment and the Government‟s interest in the ECF, and brief details of investment opportunities considered (but rejected) during the period.
In addition to the BVCA best practice the Government considers that two additional measures from EVCA best practice should be added to the monitoring data requirement:
a measure of the investee‟s performance against the fund manager‟s forecast; and
the holding period of the investment
The ECF should be prudent and consistent in its valuations and will do this by valuing investments in line with current EVCA guidelines.
The Government may also require additional reporting data (for example in relation to the employment and turnover of investee companies) to enable it to further evaluate the impact of the ECF programme on equity gap SMEs. The ECF should make it a condition of funding that the SME provide such data if and when required.
The quarterly reporting will provide the template and the data required for the ECF‟s annual report. The annual report, consistent with the BVCA‟s reporting guidelines, will include an audited profit and loss account and balance sheet.
To enable the Government to properly budget for its expenditure, the ECF will also be required to provide monthly cash flow forecasts indicating the level and timing of expected drawdowns of Government funding for the following three months
All such information received by the Government will be treated as confidential, though the Government may wish to release aggregated data on the performance of the ECF programme as a whole. Information relating to specific funds or businesses will be passed to external parties only where required by law or where necessary to support independent evaluation of the ECF programme, and any external researchers would be bound by appropriate confidentiality provisions.