Yahoo News 
Venture capital firm Draper Esprit will invest $100 million into seed funds to help them after Brexit
Draper Esprit
Venture capital firm Draper Esprit plans to invest $100 million (£75 million) into European seed funds over the next five years, helping to fill a major EU funding hole after Brexit.
Its first commitments are to two British seed funds, Episode 1 Ventures and Seedcamp. As revealed by Business Insider in May, both funds lost out on cash from the European Investment Fund (EIF) this year, after it "paused" new investment into the UK.
Draper Esprit hasn't revealed how much it's put into the two funds, both of which are still in the process of raising investment.
Simon Cook, chief executive of Draper Esprit, said the company planned to invest in up to 20 funds, angel networks, and investment platforms. The firm is currently looking at three other investments.
He said in a statement: "By partnering with the best seed funds, we can help them scale up their series A and B funding rounds more quickly, which in turn will accelerate growth for the most ambitious entrepreneurs."
Cook added that it was "imperative" that UK investors "continue to have access to the best early stage investment opportunities" after Brexit.
The news will be welcome to the UK's crop of new seed funds, which have been lobbying the Treasury for more cash after Brexit.
They face a major hole in funding after the EIF, run by the European Investment Bank, froze investments after prime minister Theresa May triggered Article 50. The EIF has historically acted as a "cornerstone" investor into European funds, meaning it will commit early and up to 40% of a new fund's cash. That gives other, smaller investors enough confidence to buy in. It has, according to Treasury calculations, invested £900 million a year into UK funds, so a sudden freeze on investment has posed a serious challenge.
Prior to Draper Esprit's announcement, VC firms lobbied the Treasury to step in and fill that £900 million funding gap.
The Treasury is currently running a consultation on boosting long-term investment into innovative companies and, in a submission seen by Business Insider, two funds — including Episode 1 — called on the Treasury to put an additional £900 million into the UK's state-owned British Business Bank to stimulate seed investment.
In their submissions, the firms pointed to a crisis in seed funding, particularly for startups trying to raise between £500,000 and £2 million.
NOW WATCH: The 5 most annoying changes in the new iPhone update — and how to fix them
See Also:
This CIA dog got fired because she didn't want to sniff bombs
British tech investors want the Treasury to hand over an extra £900 million after Brexit
SEE ALSO: British tech investors want the Treasury to hand over an extra £900 million after Brexit
