Pires Investments (PIRI ) is to invest in a new venture capital fund - the Sure Valley Ventures UK Software Technology Fund - with the British Business Bank, an investment arm of the UK.
The new SVV fund is described by the investment company as a “significantly larger” fund with “much better economics” compared to the first. The fund is expected to target a range of technology markets, including the Metaverse, Artificial Intelligence and Cybersecurity sectors.
British Business Bank (BBB), an investment arm of the UK Government, is the principal investor in the fund. Pires will initially invest c.£90,000, in the New SVV Fund its first close in order to fund the New SVV Fund’s first investment which has already been identified, it said.
The BBB is the largest domestic backer of venture capital funds in the UK. Established in 2006, the Enterprise Capital Funds programme helps those looking to operate in the UK market to raise venture capital funds specifically targeting early-stage small businesses.
The first close of this fund will amount to £85m, with the BBB investing up to £50m and other investors, including Pires Investments, investing up to £35m over the 10-year life of the fund.
Pires, a technology-focused investment company, said it expects to invest up to £5 million in total over the life of the New SVV Fund which would provide it with a circa 5.9% interest.
The New SVV Fund will invest in a range of private UK software companies with a focus on companies in the Metaverse Artificial Intelligence and Cybersecurity sectors, it explained.
The fund will be managed by the same Sure Valley Ventures fund (“SVV”) team which, to date, ‘has been highly successful in achieving a number of cash realisations from, and upward revaluations of, companies in the SVV portfolio,’ Pires outlined to investors today.
Alongside other private investors, Pires said it expects to receive a significantly enhanced share of the total return generated by the new SVV fund compared to industry standard.
Pires said the investment will enable its shareholders ‘to gain exposure to exciting, fast growing venture capital investments through a listed company structure with the expectation of an enhanced return which would otherwise be difficult for such investors to achieve.’
It noted that the business has acquired several sources available to fund this investment over the coming years. These would include, inter alia, realisations from SVV; the exercise of outstanding in-the-money warrants and previously announced upcoming liquidity events for a number of its other investments; as well as access to debt and equity capital markets, it said.
Nicholas Lee, Director of Pires Investments, says this is an “attractive investment opportunity” for Pires which, going forward, has the scope to deliver attractive returns to shareholders.
He explained that to date, the Company’s investment in the current Sure Valley Ventures fund has been “highly successful,” generating cash returns through realisations and significant increases in the value of the portfolio companies due to the majority of investments being revalued upwards on subsequent funding rounds.
He said this fund is now “moving from an investment to a realisation phase, with cash returns expected in the short to medium term.”
“The structure enables private investors to obtain enhanced returns, allowing shareholders to gain exposure to highly exciting venture capital type investment opportunities through a listed company structure with associated liquidity, on an attractive enhanced return basis,” he said.
Pires Investments first invested in Sure Valley Ventures back in November 2019 as a way of accessing ‘an attractive and established portfolio of investments’ within the technology sector as part of the Company’s ongoing focus on developing a portfolio of technology investments.
Since then, the portfolio has performed ahead of expectations, delivering both cash returns and a steady flow of upward revaluations of the portfolio companies, the company noted.
The SVV portfolio, which currently comprises 14 investments, is now moving from an investment to a realisation phase. Meanwhile, Pires highlighted to investors that it is focused on developing a portfolio of other investments in the technology sector, a number of which, such as Pluto Digital and Low6, ‘are progressing towards liquidity events in the short term.’
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