Two former Hotbed directors have launched Connection Capital, a private client investment business which will allow individuals to build a broad portfolio of direct private equity investments.

The former head of client services at Hotbed, the UK investor syndicator, Claire Madden, and the firm’s former head of private equity, Bernard Dale, launched the investment firm to improve the way individuals invest in private companies by providing a fully managed service whereby clients invest as part of an organised syndicate.

The new firm will back established, profitable UK-based companies, providing equity investments of £1 million ($1.6 million) to £7 million in management buyout, growth capital and replacement capital transactions, the firm said in a statement. Investments will be held for three to five years.

“It’s clear that the UK economy is nearing the bottom of the cycle, making investing in private companies an attractive prospect,” said Ms Madden.

“Our clients… will not be subject to the restrictions of a traditional fund structure and can therefore retain complete control over how, when and where their money is invested,” she said.

“Investee companies, meanwhile, will have access to a broad network of knowledgeable and capable investors, many of whom are looking to add value to management teams in an active advisory capacity, should they require this level of support.”

Investments will be available in tranches of £25,000, the firm said. Ms Madden and Mr Dale hope to build the network to around 200 clients in Connection Capital's first year.

At Connection Capital, Ms Madden and Mr Dale will be joined by Sue Heard and Steve Wilson, who also join from Hotbed. The chairman of the new firm will be Ian Darby, the private company investor and chief executive of Towergate Financial.