European Founders Capital (EFC) is expected to fill the gap between angel investors, who typically make hundreds of thousands of pounds available, and venture capitalists who provide millions.
Co-founders include Peter Dubens, the founder of Pipex and Rogan Angelini-Hurll. The cash will come directly from the founders, whose £20m initial investment will rise to £50m.
The venture will be Birch's fourth major investment following the sale of Bebo to AOL for £484m last year.
Last November Birch launched Wordia, a ‘visual dictionary', alongside British TV producer Edward Baker. In January he invested in Smarta, a social networking site for entrepreneurs backed by the Royal Bank of Scotland Group.
Hoberman and Dubens both have a strong track record of creating successful start-up businesses.
According to the British Venture Capital Association, VC investment fell to £230m last year, a £1 billion drop compared with 2006.
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