A new EIS growth fund from Enterprise Investment Partners and Startup Funding Club targeting outstanding scale-up investment opportunities. The Fund’s objective is to invest in a portfolio of primarily knowledge intensive later stage EIS companies across all sectors with strong growth and compelling exit prospects.
EIP and SFC have identified an opportunity in the early stage investment market and intend to invest in companies in their “growth” phase, i.e. businesses that have recently come out of the “start-up” phase by demonstrating significant commercial traction and fast growth with potential for further capital appreciation. These companies typically show that they have demonstrated a high level of business traction and have usually raised external investment before under SEIS and EIS, ordinarily achieving the milestones set as part of the previous funding rounds.
The Fund’s portfolio will include companies that have been known to the SFC team for years through its Angel Network and early stage funds which means that a solid and tested structure is already in place at the time of the investment. SFC will also rely on its network to access “new” opportunities.
The Manager believes Investee Companies will start to exit from the spring of 2023. It is anticipated this will be through a trade or private equity sale, or listing on AIM, of each of the Investee Companies. Investors should note that the Exits of Investee Companies may be delayed and none of the Exit options above may be available to the Manager.
Enterprise Investment Partners LLP
SFC Capital Partners Ltd
Other than set out below, the Manager, Administrator and SFC will not charge any additional administrative, service, dealing or exit fees to the Fund or underlying Investee Companies in which it will invest. A portion of an Investors’ Subscription sufficient to cover the Initial Fee, up to the first three years’ Annual Management Fee, and any Adviser Charges (including any applicable VAT) may therefore be held uninvested. By way of an example, if £100,000 were invested by an advised Investor with a 1.5% agreed initial Adviser Charge, 2.5% Initial Fee together with 3 years Annual Management Fees of 2% per annum (ignoring any VAT), £90,000 would be invested into the Investee Companies and available income tax relief would be £27,000 (30% of £90,000).
The Manager will pay all costs of establishing the Fund, including all Custodian, Administrator, Nominee, legal, and taxation costs incurred in creating the Fund, the preparation and issue of this document and any other direct expenses wholly incurred in establishing the Fund. In return, the Manager will receive an Initial Fee of 2.5% (plus VAT, if applicable) of Subscriptions to the Fund. For direct (non-advised) Investors, the Manager will receive a Non-Advised Set Up Charge of 1.5% (plus VAT, if applicable)
Annual Management Fee
The Annual Management Fee payable to the Manager will be 2% based on the Fund’s last published net asset value, paid quarterly in arrears. The Annual Management Fee will accrue from the date the Fund closes. From the Annual Management Fee, the Manager will pay the Custodian, Administrator and Nominee, any dealing charges, and certain Fund operating expenses, such as audit, legal and corporate governance.
Performance Incentive Fee
To align the Manager’s and SFC’s interests with those of Investors, a Performance Incentive Fee of 20% will be applied to the total return in excess of the original Subscription after deduction of amounts paid to your Financial Intermediary to facilitate agreed Adviser Charges. The fee will only be payable once you have received back the full amount of your original Subscription net of such Adviser Charges. For example, if (ignoring any Adviser Charges) your original Subscription is £100,000, the fee will not be applied until £100,000 has been returned to you.
Other Fees Payable by the Investee Companies
The Manager and SFC retains the right to charge upfront arrangement, monitoring and, where it has board representation, director’s fees, and other properly incurred and approved expenses, to Investee Companies in which the Fund invests. The cost of all deals that do not proceed to completion will be borne by Manager and SFC. VAT will be added where applicable.
Kuber Specific Arrangements
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The Scheme is structured as an Alternative Investment Fund
£2.50 per £1 invested (20% IRR excluding tax relief)
Private Equity EIS
Typically, at least 10 investee companies in each Investors’ portfolio. Diversification is a key component of the investment strategy and the Fund will target companies operating across various sectors including digital technology, life sciences and consumer goods.