Fund in Focus - Committed Capital

Committed Capital is an investment management and corporate advisory business that was founded on the basis that companies need human capital in addition to finance to support their growth.

We have been employing the same investment mandate and strategy since 2001. This remained unchanged when we launched our discretionary Growth EIS fund in December 2014 which we then opened up to retail investors in the summer of 2017.

Our investment methodology is focused on maximizing and accelerating growth in portfolio companies with the injection of human capitalto assist leading entrepreneurs develop their business to its full potential.

The importance of human capital cannot be underestimated. A company can have a world class product or service, first mover advantage and distinct USP’s but without a cohesive management team and a clearly defined sales and marketing strategy, the company at best will not achieve its potential and at worse will fail despite its potential.

To this end, we always seek a 20-40% equity position and a non-exec board position in our investee companies. Having these share holder protections in place, by attending board meetings and sharing our own experience and that of our wide entrepreneurial net, is as important as the depth and breadth of our due diligence procedures. This ensures we have our finger on the pulse and can act accordingly as and when any issues arise to further mitigate the risk of a company failing.

Target Return vs Track Record and Growth Investment Experience

Most fund managers publish a target return so that investors have an indication of what the fund manager anticipates returning in line with their investment strategy.

The questions to ask with reference to a target return is – Does the fund manager have a track record on growth investing that backs up their published target return?

Since 2001 we have been investing into UK based growth stage tech companies and so the changes brought about by the Patient Capital Review are entirely aligned with our investment strategy, and indeed the purpose of the EIS legislation when it was introduced. In that time we have made multiple investment rounds across 33EIS qualifying companies, made19 exits and 2 partial exits. Out of those exits we have realised just 1 partial failure, and have delivered an average 2.1x ROI(excluding tax reliefs) against a target return of 2-3x ROI (excluding tax reliefs).

We believe our track record is down to the depth and breadth of our rigorous due diligence and also the emphasis on human capital noted above.

Depth and breadth of Due Diligence

We are entirely transparent in our due diligence and if advisers and their investors wish to see this, we are very happy to run though this with them.

All investment opportunities are subject to a thorough due diligence investigation prior to making an investment. This comprises a review of the investee company’s management, the market in which the investee company operates, its competitive position within the market, the market dynamics, and the opportunities and risks facing the business.

The DD process involves detailed market research, including interviews with customers and suppliers, as well as building and reviewing financial models, and undertaking a valuation exercise using different methodologies including, comparable companies, discounted cash flow, comparable transactions and venture capital methodology.
We also appoint specialist professional advisers, such as accountants, lawyers and market research consultants to assist us with our investigation as required.

Latest exit

We are delighted to announce that we exited FSB Technology Ltd on 31 July 2019 making a return to investors of 2.71x ROI (excluding tax relief) in line with our 2-3x target ROI, following our investment in December 2014.

Founded in 2007, FSB is a leading Business to Business sports and internet gaming technology supplier. Using a Software as a Service business model the company offers full end-to-end sports betting and internet gaming solutions which includes data and pricing feeds, a proprietary sports betting software platform, fully-managed trading services and more.

Meet the CEO

In the below interview, our CEO, Steve Harris talks about Committed Capital’s pedigree in technology investments. He discusses the company’s selection regime. He also stresses the importance of investing more in research and development as “R&D is a linchpin to serve the UK technology sector”.