Investment Objective

The Fund’s strategy is built on three key pillars:

1. Real businesses, real innovation, real value: The Fund will only invest in B2B businesses built on core technological innovation, generating tangible economic value for the industrial sectors in the real economy.
2. Strong corporate links: The Fund will seek to leverage EMVC’s network of corporate relationships both to validate the opportunities and to accelerate the growth of the Investee Companies. These corporate partnerships may also pave the way to successful exits.
3. Follow on capital and co-investment: The Fund will seek to benefit from EMVC’s access to follow-on funding, such as through EMVC’s contacts with institutional investors, corporate venturing teams and investment vehicles. This follow-on funding may help to reduce the risk of Investee Companies becoming “stranded” by being unable to raise crucial post-seed capital.

The Fund will invest in companies raising at the Seed or Series A-B stages with the following attributes:

• Proprietary innovation in hardware or hardware-enabling software
• Applicability in any one of the Fund’s focus sectors or technology horizontals
• A B2B or B2B2C business model
• A technology or product solution designed for a clear, large and quantifiable market need
• Demonstrable interest in the solution from large corporates as a customer, R&D collaborator or potential investor
• Established core team with relevant experience and expertise

Exit Strategy

The expected holding period of most investments will be between the minimum three years for tax conditions and up to at least six years. However, it is noted that Investee Companies may be held for longer periods dependent on market conditions. It is noted that following the realisation of the Qualifying Shares in each Investee Company, the realisation proceeds will be paid to the Investors. Consequently, it is possible that Investors will receive distributions from the Fund over a period of time.

The exit strategy will, of course, vary depending on each investment. Due to the Fund’s focus, it is anticipated that for most investments, trade sales to corporates or secondary sales to financial investors will be the most likely exit routes.

Fund Manager

The Sapphire Capital Partners LLP team have extensive experience within the alternative investment sphere and act as Investment Manager to several EIS Funds. They have also won several awards within the industry including: Winner, Best Individual - rising star in EIS and SEIS (Boyd Carson, 2016 & Vasiliki Carson, 2017), Highly Commended, Best EIS/SEIS Tax Adviser (Sapphire Capital Partners LLP, 2017) and Winner, Best Company - innovation, newcomer or rising star in EIS and SEIS (Sapphire Capital Partners LLP, 2017).

Fund Provider

EMV Capital Limited

EMV Capital Ltd is a London-based investor focused on B2B companies in the industrial high-tech, clean energy, smart cities and transportation sectors. EMVC invests in, and provides advisory services related to, investments that involve a range of technologies including robotics and AI, machine vision, materials science, IoT, advanced engineering and power electronics. While not an impact investor, EMVC understand the importance and value of the circular economy and resource efficiency, reflecting this within its investment thesis.

EMVC recognizes the benefits of corporate engagement for early-stage technology companies, with EMVC’s team having led and structured investments alongside some of the world’s leading corporations. EMVC can also provide advisory services to fast-track investment readiness as a specialist in techno-market strategy for IP-rich companies.

Fees

Fees Payable by Investors (and therefore not available for EIS Reliefs)

Entry Fee

A fee of 0.75% of the amounts subscribed will be charged upon Investment into the Fund to cover the Fund’s set-up costs.

Management Fee

An annual fee of 1.05% of the amounts invested will be charged to each Investor’s account for the first five years, with respect to each investment, payable annually in advance. This will be used to cover the annual costs of the Fund Investment Manager and the Custodian.

A maximum of three years of the above management fees (being 3.90%) will be retained by the Custodian, in a client account, on behalf of the Investment Manager (and therefore not available for EIS Relief). Fees due for years four and five will accrue and become due upon realisation of each underlying investment, provided that the investor is returned no less than £1.10 for every £1.00.

Fees Payable by Investee Companies (indicative only) (available for EIS Reliefs)

Initial Fee

An initial fee of 3.0% to 5.0% of the amounts invested into each Investee Company is payable by each Investee Company to EMVC. This will go towards covering the costs of the Investment Advisory service EMVC provides to the Fund and any affiliated transaction costs.

Annual Charges

An annual charge is payable to EMVC by each Investee Company equal to a total of 1.0% to 2.0% of the amounts invested in the Investee Company for years one to three (to be agreed to on a deal-by-deal basis between EMVC and the Investee Company). This will go towards covering the costs associated with monitoring and supporting each Investee Company’s growth with a view to the Fund’s targeted returns. It is noted that annual charges may extend beyond year three at the discretion of the Investment Manager.

Performance Fee

In order to align interests between EMVC and Investors, no performance incentive is payable on any Investment until Investors receive cash proceeds equal to the total invested in the Investee Company. The performance fee will then be payable to EMVC or related parties as follows:

1. On any increase in value on an individual investment in an Investee Company over £1.10 (for every £1 invested) a total performance fee will be charged of 20% on the amount of the increase over and above £1.10
2. It is noted that no performance fee will be charged on any amounts below the hurdle rate of £1.10 noted above.

This performance incentive may be payable as a fee to EMVC on behalf of the Investors out of cash proceeds in the Fund on behalf of Investors, or by way of equity in an Investee Company. Different investments may require different structures but will be to equivalent economic effect.

To the extent that the performance fee is not paid by the Investee Companies, Investors shall be liable for their share of such fee and the Custodian may be instructed by the Investment Manager to transfer cash in an Investor’s Portfolio to EMVC to satisfy any outstanding performance fee.

Other Costs

Any reasonable arm’s length expenses and/or transaction fees incurred by the Investment Manager in managing the Fund and/or by the Custodian or Investment Adviser in assisting the Investment Manager or Investee Companies shall be reimbursed by Investee Companies.

The fees and charges described above are exclusive of VAT, which will be added where applicable.

Kuber Specific Arrangements

Kuber receives a fundraising fee of .78% from the manager.

Kuber will return this fee to Investors by applying it to their Subscription amount thereby increasing their investment.