Guinness EIS

The Guinness EIS fund looks to offer scale-up capital to businesses with proven technology or services, already generating revenue of £1 million or more.

Since adopting its growth capital strategy in 2018, the fund has invested £155.8 million into 47 companies across 252 investment rounds (December 2023) and found some early success. It has achieved three full and three partial exits, generating total proceeds of £32.9 million on an investment cost of £12.7 million, with the remaining portfolio showing an unrealised value of £210.9 million – past performance is not a guide to the future. 

Moreover, in recent years several companies have featured in reports such as Deloitte’s Fast 50 (Popsa, Distributed, and Cera Care) and the FT 1000 (Thriva and Wolf & Badger) which aim to highlight some of the fastest growing companies each year. 

• Target return of 2x after 4-5 years, not guaranteed
  
• Aims to fully deploy investors’ capital into at least 10 companies within the tax year a tranche closes 
• Minimum investment of £20,000; you can apply online
• Next tranche deadline: 28 June 2024

The manager

Guinness Asset Management was founded in 2003 and now manages £7.5 billion across its equity funds, EIS funds, VCT and an IHT fund (December 2023). It is one of the largest EIS fund managers, having raised over £300 million across its EIS funds since 2010 and launched a new VCT in 2022.

The Guinness EIS funds and VCT are overseen by the 11 -strong Guinness Ventures team. Shane Gallwey, a CFA Charterholder, leads the team and is assisted by three fund managers. 

While there is no requirement for management to invest in the EIS, the team has committed £3 million since the fund’s inception.

Before your subscription is invested, the cash will be held by the custodian, Mainspring Nominees Limited. Shares will be held by the nominee, GAM MNL Nominees Limited. 

Investment strategy

The Guinness EIS fund adopted its current growth capital strategy in 2018. It looks for companies requiring scale-up capital, with proven technology or services as well as strong balance sheets and cash flows. 

The fund requires companies to be generating at least some revenue prior to investment, preferably £1 million or more. Over the 2021/22 and 2022/23 tax years, the average annual revenue at the point of investment was £5.8 million.

Due to the number of opportunities the team reviews, Guinness employs a quick filtering process to ensure companies it believes to be the best receive most attention. The investment team pitches new deals daily to progress the strongest candidates into the next stage of assessment. 

If possible, Guinness aims to add deal structuring and syndication. The fund has four tranche closes per tax year.

Portfolio

Since 2010, Guinness has raised over £300 million across its EIS funds and invested in more than 180 companies. Since adopting its growth capital strategy in 2018, the fund has invested £155.8 million in 47 companies (December 2023). 

Guinness will target a portfolio of at least 10 companies across a range of sectors. The targeted hold period is four to five years, not guaranteed.

Top 10 sector breakdown by investment cost (%)

Below are portfolio company examples from previous iterations of the fund. They are outlined to give a flavour of the types of companies you might expect but are unlikely to be part of a new investor’s portfolio. 

Maestro Media (BBC Maestro) – recent investment

BBC Maestro offers masterclass courses with some of the most experienced creators in the world – from learning to cook with Marco Pierre White to launching a business with Peter Jones CBE. 

Founded in 2019 as a partnership with BBC Studios, the platform now offers around 200 hours of content, from 37 ‘maestros’. Users can buy access to individual courses or pay an annual subscription for unlimited access. 

In January 2024, BBC Maestro partnered with Spafax, which provides in-flight entertainment to airlines including British Airways. 

Guinness first invested in April 2023 via the Guinness Ventures VCT and its EIS fund. The Guinness EIS Fund provided further funding in December 2023, taking its total investment to date to approximately £3 million.

Wolf & Badger

Wolf & Badger was founded in 2010 by brothers Henry & George Graham. It started as a boutique in Notting Hill, London, and is today an online marketplace for over 2,000 independent brands, selling ethically sourced fashion, jewellery, beauty and homeware through its website and three physical stores in London, Los Angeles and New York.

All brands are vetted for their sustainability and ethical credentials, rewarding things like happy workers, or a brand’s low impact and artisan craftmanship. Customers can then filter products based on those criteria when browsing the site.

In 2023, Wolf & Badger reported revenues of £34 million, up 15% on the year before. According to the company, it also achieved profitability and saw its busiest ever Christmas trading period.

Guinness first invested in February 2019, and followed on in 2021 and 2022, investing a total of £9.7 million. The stake is currently valued at £21.4 million. Past performance is not a guide to the future.

ContentCal – example of recent exit 

Content marketing helps companies reach and build relationships with their audience through relevant and useful articles, videos, emails and social media posts. 

However, managing a huge amount of content across different platforms and channels can be challenging and time consuming. That’s where ContentCal comes in. 

Founded in 2016, ContentCal makes content creation, planning, scheduling and posting simple across websites and social channels. Streamlining that process frees up time so marketing teams can focus on the activities that add the most value. The platform has attracted customers like the NHS, Specsavers and BMW as well as many freelancers and agencies.

Guinness invested £2 million in the business in March 2021, alongside the British Business Bank and Fuel Ventures in a deal that valued the business at £16.7 million. In December 2021, it was announced that ContentCal had been acquired by Adobe, generating a total return on Guinness’ investment of 4.8x. Past performance is not a guide to the future. 

Bidvine – example of previous failure

As with any early-stage investment, not all will work out. One such example is Bidvine.

Bidvine was a marketplace that put tradespeople in touch with potential customers. Popular categories included photographers, nail and hair stylists, plumbers and gardeners. 

Guinness first invested in April 2020, but the company struggled during the Covid pandemic and business level fell dramatically. Although the business pivoted to offering online services, the risk profile increased considerably and Guinness decided not to reinvest. The business failed to attract further funding and went into administration in September 2021, with Guinness writing off its entire investment.

Performance

Since switching to its growth capital investment strategy, Guinness has achieved six exits (three partial and three full): ContentCal (above), Pasta Evangelists, Imagen, Cera Care, Jones Food and Aptem (previously MWS Technology). These have returned £32.9 million to investors and generated an average 2.6x realised return, before tax reliefs. Please note past performance is not a guide to the future. 

The chart below shows the average performance of the total subscribed into the funds in each full tax year from 2012/13 (or from when the current strategy was adopted if later) to 2022/23. The chart is based on the latest valuations provided by the manager, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.

Performance per £100 invested in each tax year

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

EIS investments are high-risk and should only form part of a balanced portfolio. As must be expected with early-stage investments, some or even all of the companies in the portfolio could fail: the fewer the companies included in the portfolio, the higher the risk of loss if things don’t go to plan. You should not invest money you cannot afford to lose.

There is no ready market for unlisted EIS shares: they are illiquid and hard to sell and value. There will need to be an exit for you to receive a realised return on your investment. Exits are likely to take considerably longer than the three-year minimum EIS holding period; equally, an exit within three years could impact tax relief.

To claim tax relief, you will need EIS3 certificates, normally issued once shares have been allotted. This can take several months: please check the deployment timescales carefully. Tax reliefs depend on the portfolio companies maintaining their EIS-qualifying status. Remember, tax rules can change and benefits depend on circumstances.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.

Charges

A summary of the main charges and savings is shown below. Some of these will be payable by the investor, whilst others by the investee companies. The investment may have additional charges and expenses: please see the provider documents, including the Key Information Document, for more details. 

Our view

The Guinness EIS fund aims to invest in scale-up opportunities in fast-growing companies that have demonstrated an ability to generate revenues, have strong financials and sound business models. 

In the 2021/22 and 2022/23 tax years, companies backed by the Guinness EIS fund had average annual revenues of £5.8 million at the point of investment. What’s more, there appear to be a number of promising companies emerging within the portfolio, such as Thriva, Popsa and Wolf & Badger – all of which appeared in the FT’s 2023 list of the fastest growing companies in Europe.

The investment team is well resourced, and the fund has raised and invested a sizeable amount since it first began making growth capital investments. All this could make Guinness a desirable destination for entrepreneurs. Guinness Asset Management has shown an ability to attract deal flow and deploy investors capital in line with its investment strategy: note past performance is not a guide to the future.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.