Fund in Focus - Par Syndicate EIS Fund

Background

Established in 2008, Par Equity is a venture capital firm with a hands-on, high impact investment style. We seek out opportunities to invest in innovative young companies with strong growth potential and work closely with them to help them succeed.

What stands us out from the crowd, is that we not only provide financial capital to a deal but also that of intellectual capital as well. Through our Par Syndicate of business angels, we have a reservoir of senior industry expertise that we can tap into, to provide mentoring, insight and advice to our portfolio companies, who know the market sector they are in, nurturing them to achieve their dreams and ultimately to provide profit for our investors.

Our results speak for themselves with over £50 million invested in 45 companies, Par Equity has delivered 12 exits (both positive and negative). The twelve exits have generated aggregate proceeds of £38.0 million on investment of £7.8 million, representing a cash-on-cash multiple of 4.9x and a realised IRR of 41%.

The Par Syndicate EIS Fund (“the Fund”)

The Fund is an evergreen EIS fund that is always open for subscriptions with a minimum investment of £20,000. We aim to deploy an investor’s subscription over around twelve months following receipt of their capital and will put it to work in half a dozen or so portfolio companies. EIS relief can generally be claimed with effect from the dates on which individual company investments are made.

The Fund co-invests with experienced business angels, usually those within Par Equity’s investor network (“the Par Syndicate”) but occasionally other expert business angel groups.
Investors in the Fund therefore stand to benefit from the expertise and hands-on involvement of industry insiders whose money is invested at the same time as, and on the same terms as, the Fund.

Investment Strategy & Target Return

The Fund focuses on innovation-led companies that hold the potential to deliver strong growth through market disruption. Value is generated by selecting companies that are judged to have passed their point of peak technology risk and which are beginning to generate commercial traction – winning customers and making sales.
The Fund invests across a range of technologies and stages, generally in companies with revenues and which are growing towards profitability but not necessarily yet profitable.

The full benefits of the Fund’s portfolio diversification strategy are likely to require repeat subscriptions to achieve, although each subscription is likely to be invested in 5 – 6 portfolio companies.

The Fund’s benchmark internal rate of return is 15% on an assumed five year return period. This is equivalent to a 2.0x pre-tax return on a five year return period.

Par Equity’s Investment Model

Par Equity’s investment model sees Fund investors invest alongside industry experts within the Par Syndicate, experienced business angels who work with management teams to build value and reduce risk in portfolio companies.

The involvement of successful individuals with entrepreneurial track records, industry insights and broad networks –who are also investors – delivers a critical extra dimension to Par Equity’s investment model, as these individuals play a prominent part in identifying and evaluating potential investments, as well as working with portfolio companies to help them realise their potential.

Patient Capital Review

The recent Budget was exciting for the EIS industry, and for Par Equity in particular. EIS was the only tax efficient investment vehicle that was enhanced in the Budget, with investment limits into technology and knowledge intensive companies being doubled. It is an enormous vote of confidence in EIS, and in what we do at Par Equity.

The outcome of the Patient Capital Review also led to the announcement in the Budget that EIS schemes that focus on capital preservation are to be stopped. At Par Equity we wholeheartedly welcome this development. We have always believed that the companies we invest in should carry risk, and offer significant rewards. Our way of managing risk is entirely consistent with what the Treasury are looking for. We select the right companies to invest in, and then give them the support they need to grow and become successful.

If you are interested in further information about the Par Syndicate EIS Fund
and future opportunities please contact us on info@kuber.uk.com or +44 (0) 20 7952 6685.