MMC Ventures EIS Fund

MMC Ventures has invested exclusively in technology for over 20 years. The business has a proven track record of backing some of the UK’s fastest-growing private technology companies, including Gousto and Bloom & Wild, and a history of delivering realised returns, with £162.8 million returned to EIS investors on investments made since 2010.

MMC believes the companies most likely to transform an industry will do so from the inside out: improving existing technology, rebuilding tech infrastructure and using data in fundamentally new ways. These are the businesses MMC aims to identify and help scale, across areas such as e-commerce, fintech, and digital health. 

The fund has achieved a number of major exits in the last 12 months, including Interactive Investor (acquired for £1.5 billion), Brightpearl ($360 million) and Current Health ($400 million). At the same time, several companies have attracted substantial funding rounds over the period (YuLife, RPA Superviser and Snowplow). Past performance is not a guide to the future.

• Target return of 3x after four years, not guaranteed 
• Targets a portfolio of around 10 companies, deploying investors funds over 12-18 months 
• £25,000 minimum investment – you can apply online

The manager

MMC Ventures Ltd (“MMC Ventures” or “MMC”) was founded in 2000 and has always exclusively invested in high-growth technology-enabled businesses. It started as a syndicate for high net worth individuals, launching the EIS fund in 2005. 

Today MMC has over $1 billion under management. In addition to the EIS Fund, it manages two institutional funds: the £52 million MMC Greater London Fund, launched in May 2019, and the £100 million MMC Scale-Up Fund, launched in November 2019. 

The former is a seed and pre-seed fund backed by the Mayor of London. It invests at an earlier stage than the EIS Fund and provides potential deal flow. In the words of Managing Partner Bruce Macfarlane, “if you’re not in early, it can be hard to get in at a later stage”. 

The MMC Scale-Up Fund sits at the other end of a company’s journey. It looks to invest once companies have grown beyond the limits of EIS investment. MMC believes this will appeal to existing MMC-backed entrepreneurs looking for later-stage funding as well as EIS investors seeking another potential route to exit.

In our view, the MMC Ventures’ EIS is strengthened by these additional mandates.

The investment team of 16 includes investment professionals and two of the three founding partners. They come from a range of backgrounds, from experienced venture capital investors to younger talent from consultancies, investment banks, law firms and asset managers. 

The team seeks to develop a deep understanding of the technologies employed in its areas of focus, so as to identify the highest-potential opportunities. This is enhanced by working closely with investee companies to gain first-hand experience. In fact, several MMC team members have since joined investee companies and now serve as advisers to the MMC investment team. 

The MMC team commits to investing in every EIS fund deal and has invested around $18 million to date. This helps align the management team’s interests with those of investors.

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

Investment strategy

MMC invests across a variety of subsectors within technology, including fintech, digital media, digital healthcare, consumer internet (including e-commerce), as well as travel and transport. 

It operates a two-stage Investment Committee process when assessing new investments. The first is before terms are offered to a potential investee company, with the aim of shaping the due diligence focus. The second is to review the due diligence findings before investments complete. 

As well as providing capital, MMC draws on its own experience and network to assist investee companies in areas including international expansion, senior hiring, access to potential clients, corporate governance, fundraising, bank finance and exit. Its research team works closely with investee companies to help them grow.

MMC targets an initial investment of £1–7 million in each investee company. MMC can support companies as they grow through further EIS funding of up to £12 million per company, or up to £20 million if it is a ‘Knowledge Intensive’ company. Beyond that, the Scale-Up fund could potentially provide support.

The fund aims to return 3x the invested amount over the investment period, with realisation expected from year four – not guaranteed. 

Portfolio

Investors into the MMC Ventures EIS Fund can expect a portfolio of around 10 companies (not guaranteed) comprising new deals and more mature investments. MMC aims to deploy funds over 12 to 18 months, not guaranteed.

The companies outlined below are previous investments made by the MMC Ventures EIS Fund. Note these are previous EIS investee companies and may not form part of a new investor’s portfolio. They are outlined to give examples of the types of companies an investor might expect.

Loadsure – recent investment

Just-in-time supply chains, where stock is ordered form warehouses or suppliers at short notice, have to respond to shipping demand with very short lead times. That can make it difficult to secure insurance, and as a result between 60% and 90% of cargo in transit is either under- or uninsured.

Loadsure has set out to solve that problem. A combination of extensive data sets and an automated, AI-powered rating system allows the company to deliver accurately priced freight insurance in just 40 seconds and process claims in near-real time. 

MMC invested as part of a $11 million Series A round in March 2022, alongside existing investors and US shipping and logistics group Crowley.

Gousto

Gousto has created food delivery technology that offers customers a weekly box of healthy, responsibly sourced ingredients, providing everything needed to cook a selection of meals. The business uses automation and machine learning to route boxes in its warehouse and has developed an algorithm to predict what each customer will choose to cook for dinner, helping to reduce food waste.

This approach has enabled the business to grow rapidly and Gousto sold more than 90 million meals in 2021, up from 53 million meals in 2020, equivalent to three meals every second. At the same time the company’s revenues climbed 67% on 2020 to reach £315 million in 2021. 

MMC first invested in 2013 and has participated in multiple rounds of funding since, most recently in April 2020. In 2020 MMC’s investors were given the opportunity to partially exit their investment, with investors achieving realised returns of up to 27x their original investment. Please note, this is an exceptional return and past performance is not a guide to the future.

In January 2022, it raised £111 million in debt and equity funding from Softbank, HSBC and Barclays, valuing the business at $1.7 billion. Proceeds are expected to fund a fifth AI-driven fulfilment centre and create 40% more capacity.

Current Health – example of previous exit

Founded in 2015, Current Health brings together remote patient monitoring, telehealth, and patient engagement into a single platform for healthcare organisations.

Patients wear a wireless device (armband) that continuously gathers data. The platform uses that data to provide real-time insights into a patient’s condition – optimising patient outcomes and cost of care and helping health organisations deliver safe and effective care at home. 

Today, 13 of the largest healthcare systems in the US and UK – including Mount Sinai and Dartford & Gravesham NHS Trust – use Current Health to manage patient care. 

MMC first invested in Current Health’s seed round in July 2018, then leading the 2019 Series A round and participating in the 2021 Series B. Over that time the business received approval for its technology from the US regulator and started its expansion into the US.

In November 2021 the company was acquired by US retail giant Best Buy for $400 million, delivering an average return on investment of 4.9x. Past performance is not a guide to the future.

Mastered – example of previous failure

Investing in small companies is high risk and inevitably not all will work out. Mastered is an example. 

The business delivered online and in-person tuition for the creative industries, with feedback, coaching and content from prominent industry figures. 

The MMC Ventures EIS Fund first invested in early 2016. The company grew well and MMC invested again in 2017. However, over the course of 2017 and 2018, the business took longer than hoped to fill enrolment targets and sign corporate sponsorship deals. This resulted in a need for further investment.

Ultimately, conversations with potential new investors did not result in an offer of funding or acquisition, and MMC decided not to commit further money. The board put the company into administration ensuring any customers already enrolled could finish their courses.

Performance

MMC Ventures has a strong track record of delivering returns to investors. Since 2010, the MMC Ventures EIS Fund has invested in 59 companies and achieved 17 full or partial exits, as well as 11 failures. It has invested £232.0 million, realised £162.8 million, with a remaining value of £405.9 million (June 2022). 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 2021/22. 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 per 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, 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

We believe MMC Ventures is a credible and experienced manager. 

It has built an impressive track record backing some of the UK’s fastest-growing technology start-ups and delivering realised returns to investors. The fund has announced a series of high-profile exits in recent years, while its portfolio companies have continue to raise new funds at a healthy premium to MMC’s original investment valuation.

These recent successes may help attract the most ambitious entrepreneurs seeking funding. We think MMC’s two institutional funds, The Greater London Fund and the MMC Scale-Up Fund, may also enhance the EIS offer by providing increased deal flow and exit opportunities respectively (not guaranteed). 

The fund benefits from a well-resourced and experienced management team that invests personally in every EIS deal, committing around $18 million to date. That means their interests are aligned with those of investors. 

Overall we think MMC could be an attractive consideration for investors looking to invest in technology via an EIS fund.

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.