Newable EIS Scale Up Fund 3

STRUCTUREFund
MIN. INVESTMENT£20,000
SECTORTechnology
CLOSING DATEEvergreen
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Summary

The Fund seeks to leverage Newable’s unique corporate infrastructure to invest in knowledge intensive companies at the point of commerialisation and once a company has proven the concept through early-stage revenues.  The investments are supported by Newable's wider platform, providing serviced offices, advisory services, and lending solutions.


Newable also benefits from the expertise of circa 300 professionals, the Newable EIS Scale-Up Fund 3 has a unique eco-system from which to originate, undertake due diligence, execute, support, monitor and ultimately exit investments. The Fund aims to provide investors with a diversified portfolio of 7-10 knowledge intensive companies, offering investors exposure to an exciting asset class without the need to stock pick and commit management time.


Newable is independently recognised as one of the UK’s leading investment networks and draws on a 36 year track record as well as long term partnerships with the U.K. government and business community. 


Risk is mitigated through a selection methodology and due diligence built around Newable’s +300 strong investor group as well as by leveraging the Enterprise Investment Scheme for early stage investments


Application Process Update

In light of events happening around the world, managers have been revising their application acceptance procedures in close co-ordination with Custodians to ensure applications and funds are processed efficiently. Once you have submitted your application to CoInvestor a member of staff will contact you directly with further instructions for the relevant fund manager.

Highlights

  • Newable can provide strong support at the scale-up growth stage, drawing on broader group resources across a range of disciplines including grant writing services, export services and innovation advice.
  • Newable curates one of the most comprehensive and sophisticated deal flow eco-systems in early stage investing. This eco-system yields around 1,500 investment opportunities every year.
  • The Newable Ventures Investment Advisory committee has over 110 years of combined investment experience with a track record of making successful investments across the Innovation and Technology space. Recent examples include:
  • Atelerix: Invested Jan 2018 returning a 2.07x uplift in share price
  • Cognism: Invested in March 2018 returning a 3.42x uplift in share price
  • Hummingbird Technologies Invested in March 2018 returning a 2.25x uplift in share price

Key team

Hitesh Thakrar - Chairman - Investment Committee

Venture Partner at Syncona Europe’s largest life science Fund and on the Board of Alan Turing Institute, UK data science and AI institute. Previously top rated Innovation Fund Manager in global equities for Abu Dhabi Investment Authority (ADIA) and New Star Asset Management. Degree in Chemistry, King’s College, London, MBA Cranfield and CFA Charterholder. Innovation fellow at Cambridge University.

Sanjeev Gordhan - Ventures Director

Sanjeev started as an entrepreneur before going onto selling his own business. Prior to joining Newable, Sanjeev spent five year as a Wealth Manager specialising in venture capital.  Sanjeev holds a diploma in Regulated Financial Planning and an MBA from CASS Business School.  

Michael Walsh - Managing Director Newable Ventues Limited and Newable Group CFO

Mike provides strategic financial support across the business and previously managed over £300m of VC investment funds. Mike has worked for some 30 years in financial services and qualified as a CA from PWC.

Investment strategy

The Fund will target the funding gap that exists for companies which have potentially de-risked their technology, developed traction with customers and now seek funding to scale their commercial operations. The Fund aims to provide investors with a diversified portfolio of 7-10 qualifying companies per investment.

Preliminary investment profiling

Management team: High calibre, committed, track record of scaling and exiting businesses

Technical; significantly mitigated through product development and previous funding

Commercial: Evidence of revenue generation

Large addressable market in the UK and where appropriate, globally

Evidence of scalable business model (typically with a B2B focus) with a growing and predictable revenue stream

Company Specific Factors:

Sustainable competitive advantage

Competing on value rather than price; evidenced by increasing customer productivity

Use of Scale-Up Funds

Investments made by the Fund are targeted to support a Company’s organic growth and development.

Value is generated by growing the revenues, customer base and where necessary, recruiting suitably qualified employees.

We anticipate that money invested by the Fund is not used to solely fund preexisting working capital commitments.

Lead Investors & Board Representation

The Fund aims to invest in Qualifying Companies alongside a Lead Investor with sector specific skills. They will normally join the Investee’s Board as a directoror alternatively act as a Board Observer post-investment. Previous Newable EIS Funds have co-invested alongside industry leaders and successfully cashed out entrepreneurs with the experience to suggest that they can

add significant value to investees. 

Post-investment Support

Scaling businesses need support; the Newable team aims to support portfolio companies in business development, H.R and future fundraising activities. We are able to potentially access resources including Office Space, Grant Writing and Export Advice provided by Newable.We can demonstrate a track record of helping companies obtain nondilutive Grant Funding as well as Coinvestment from both our Investor Network and Co-investment Partners. Operationally, we have helped portfolio companies to source new CEOs who are considered more suited to delivering the next stage of growth.

Risk Management

Managing the risks associated with early-stage investing sits at the heart of our Fund and we deploy various techniques to assess the core risks of each Company we invest in. 

Diversification: Good ideas can fail. A primary goal of the Fund is to diversify away some firm-specific risk. We do this by investing in a portfolio of Qualifying Companies across a range of sectors.

Track record & cultural fit: Ultimately we are backing a Management Team to deliver a given business plan. We assess not only their track record and qualifications but also how well they will gel with our syndicate.

Commercial vs. Technical Risk: The fund targets investment where the majority of the risk relates to scaling operations and growing revenues.

Post-investment monitoring

We monitor the progress of portfolio companies post-investment. We speak with Company Management and Lead Investors to review performance against budget and strategic plans on a rolling six-month basis. Our Investment Agreements contain

provisions requiring portfolio companies to provide regular management information. Where possible, we will consult with a syndicate of Investors who may nominate one of their members as a Board Director/ Observer.

Risks

Company specific risks

All investments carry an inherent failure risk and some businesses are riskier than others. It is always possible that your investments may fail or be sold at a substantial loss. As a general rule, most early-stage knowledge intensive businesses raising investment under the EIS will typically have very little in the way of fixed assets. Most of their valuation is attributed to a combination of supporting IP (where possible) and the belief in the Management team to deliver the financial forecasts. EIS companies are often dependent on a few key executives. Any changes to the leadership team can have a big impact on the success of the company.

Tax reliefs are not guaranteed

The rates of tax, tax benefits and allowances that are described in this Information Memorandum are based on current legislation and HMRC practice - these may change from time to time and as such, they are not guaranteed and are subject to the personal circumstances of the investor. 

Qualifying investments are not guaranteed

There is no guarantee that sufficient investments in EIS companies will be made within the expected timetable, or at all. In addition, it is possible that the EIS companies may subsequently cease to qualify for EIS tax reliefs, in which case, the tax reliefs you receive could be delayed or lost. Conflict of Interest Policy Newable or the Manager may have a material interest in any investment within the Fund. They may also have provided within the previous twelve months, significant advice in relation to the investment concerned or a related investment.

Diversification

Diversification may not be achieved and investments may be in the same sector. As you will be investing in unquoted companies, the shares are illiquid and may be difficult or impossible to sell. It is therefore important to view the Fund as a medium to long-term investment of typically 5-8 years.

Dilution

Investments made by the Fund are also at risk of dilution if the investee company issues more shares in future funding rounds. However, it should also be noted that the dilution effect can be offset by having cash in reserve and an increase in the valuation of these companies. 

Fund performance 

The past success of any EIS investment or its manager is not an indication of the likely future performance of the investment

you may be considering. There may be insufficient availability of quality investment opportunities for the fund manager.

Mitigating risk through portfolio diversification 

Many investors lack the time or confidence to “pick a winner”, or a portfolio of winners. Many have recognised that by investing in a Fund, investors are able to diversify their risk through exposure to a wider portfolio of companies. This allows Investors to spread their cash across a select group of start-ups that meet our strict investment criteria. Investors still need to ensure they are

comfortable with the risk profile of a Fund investment and we would always recommend they engage suitable advisors to fully understand this.

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