Boundary Capital Impact Life Fund

Offer closed 

As at 30 March 2022 (5pm), the Boundary Capital Impact Life Fund is closed. 

Please see other EIS offers that are currently open.

Boundary Capital was established by a group of entrepreneurs in 2013. It recently launched the Boundary Capital Impact Life Fund, a “Knowledge Intensive” (KI) EIS fund. It seeks to invest in companies that “enrich people’s lives” while also delivering financial returns for investors.

Since launching in 2013 Boundary Capital has invested a total of £3 million. Of this, £2.1 million were in 10 EIS and SEIS companies it believes would meet the fund’s impact selection criteria, achieving two exits along the way. One of the exits was profitable and returned £703,454 to investors. The current portfolio is valued at £2 million. Please note, past performance is not a guide to the future and these are early-stage companies, which can and do fail.

The ‘KI approved fund’ structure may offer tax-planning advantages: investors may be able to obtain relief earlier and also have the option to carry back to the 2020/21 tax year (more details below). The fund will seek to invest in a portfolio of 8–12 companies.

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. When you invest in early-stage businesses, you should expect some to fail. They are high risk and illiquid. You could get back less than you invest.


Highlights

  • KI Approved EIS fund: timing advantages for income tax and the opportunity to carry back
  • Additional ‘Impact’ analysis means fund will seek investments that “enrich people’s lives”
  • Target return of 3x over a period of 5-7 years, not guaranteed
  • Aims to invest in a portfolio of 5 to 9 companies
  • Minimum Investment of £20,000, you can apply online

The manager

Boundary Capital was founded in 2013 as a venture capital firm focused on early-stage technology investments. Since its inception, it has invested £3 million into 15 companies across its EIS funds (February 2022). 

Boundary Capital is led by Managing Partner Dan Somers. Dan is a serial entrepreneur and co-founder of several technology businesses, most notably founding VC-Net in 2000. The business provided managed services for video conferencing. The business grew to a turnover of £7 million, and employed 26 employees, before exiting to AVM Limited in 2011 for an undisclosed sum.

Dan is supported by three partners; Dr Richard Leaver, an experienced fund manager and CEO, Dr David Gee, who has 20 years’ of industrial and venture capital experience, and Dr Adrian Parton MBE. Adrian has a wealth of experience in industry, having successfully grown businesses from concept to production and exited three businesses, each for between $17-$20 million. Adrian is also a director of AB-Polyblock Limited, Inotec AMD Limited, Redlist Revival, Objective Imaging Limited and Ivy House Country Hotel Limited.

Knowledge-intensive approved EIS funds: how do they work?

Knowledge-intensive (or KI) approved EIS funds received the final go-ahead from the Chancellor in March 2020.

A KI fund must invest 80% of its portfolio in “knowledge-intensive” companies. These are businesses that are carrying out research, development, or innovation at the time of investment.

Provided certain conditions are met, a KI approved EIS fund allows investors to set their income tax relief against liabilities in the same tax year the fund closes or to carry back to the previous year, whereas a conventional EIS fund will allow investors to claim tax relief based on the tax year in which each individual investment is made or carry back to the previous tax year.

Investors in KI funds can expect to receive a single EIS5 certificate (as opposed to individual EIS3 certificates for each investee company, as is the case with non-approved funds). Certificates can be issued once the fund has invested 90% of its capital, which it is required to do within 24 months of the close. 

Please note: tax rules can change and benefits depend on circumstances. To maintain KI approved status, the fund needs to comply with requirements set out by HMRC. Should the fund fail to do so, it will impact investor tax relief. 

Investment strategy

Boundary Capital believes impact can be achieved by long-term structural change, through new processes, new products, new ways of doing things or new markets. It focuses on B2B  technologies across three core sectors: Life Sciences, Engineering, and Software and data science. The fund will look to invest in companies and technologies that are disruptive and have some evidence of viability such as growing sales or licensees. 

Boundary will seek to make investments along six main themes:

  1. Consumption – Reducing the intensity of resources and increasing efficiency.
  2. Emissions – Reducing wastage and pollution, while improving recycling, clean energy and transportation.
  3. Sustainability – Enhancing renewable energy and recyclable products.
  4. Health – Improving life expectancy and quality of health.
  5. Wellbeing –Improving quality of life, fitness and self-esteem.
  6. Enfranchisement – Improving safety and security through access to education, finance, employment and services. 

How does Boundary assess “impact”?

Boundary has developed its own “Equivalent Lives Impacted” (ELI) framework. 

There are three aspects to the framework:

  • Scale of impact: How many lives could be affected by the company’s technology. 
  • Degree of impact: The extent to which a person benefits from the technology. For instance, a wound care business would have a primary effect on its users, whilst a more efficient battery design would have a secondary impact. 
  • Risk: A subjective assessment of the likelihood of a company achieving success, for example, the probability of a drug gaining regulatory approval.

Taken together these factors provide Boundary with a more quantitative assessment of the effectiveness of its investments when considering the fund’s impact objectives.

The Boundary Capital Impact Life EIS Fund is a Knowledge Intensive Fund.

Target return

Each investment should have the potential to return 10x over five to seven years, in the manager’s view. Overall, the fund will target a 3x return over that period, allowing for failures and dilutions. 

Exit strategy

The fund aims to exit investments in five to seven years, although this is not guaranteed, exits may take longer. Following any sale of qualifying shares in a company, the sale proceeds will be paid out to investors, so any distributions from the fund are likely to be paid over a period of time. The level of distributions is not guaranteed and you could get back less than you invested. 

Portfolio

The fund aims to invest in five to nine companies, with no single investment accounting for more than 50% of the portfolio at the outset.

Since launching in 2013, Boundary Capital has invested £2.1 million in 10 EIS and SEIS companies it believes would meet the fund’s impact selection criteria. The current portfolio is valued at £2.0 million, with exit proceeds of £704,000 (November 2021). 

The companies outlined below are historic investments made by Boundary Capital. They are outlined to give a flavour of the types of companies you might expect but may not be part of a new investor's portfolio.  

Inotec – Boundary Capital Impact Life EIS FundInotec AMD 

Inotec has developed a new treatment for chronic wounds, such as diabetic ulcers, using oxygen to promote faster healing. Sold under the NATROX brand, 71% of patients in clinical trials have experienced faster wound healing with 52% of wounds healing completely. 

The University of Cambridge developed treatment is approved by US and European regulators and trademarked in the EU, UK, US, China and India. The company has been approved to sell to Veterans Health Administration Hospitals, the largest integrated health network in the US, responsible for the treatment of more than 9 million US veterans annually.

Since it was founded in 2004 Inotec has secured significant funding from leading venture capitalists including Amadeus Capital Partners and Abcam founder Jonathan Milner. Boundary Capital initially invested £150,000 in November 2019 as part of a round that also included Amadeus Capital and Praetura Ventures. It is currently valued at 1.63x initial cost. Past performance is not a guide to the future.

Dymag – Boundary Capital Impact Life EIS FundDymag

Dymag manufactures wheels for high-performance motorbikes and cars. Founded in 1974, the company started out manufacturing magnesium wheels for F1, IndyCar and GP500 Superbike customers. In 1995 it became the first commercial manufacturer of carbon composite motorcycle wheels and continues to manufacture wheels for racing and luxury vehicle customers today. 

The company reported record sales growth in 2020/21 as demand from luxury car specialists and aftermarket wheel companies accelerated. This was driven by the expansion of the BX carbon rim range, which has been expanded to cover wheels suitable for lightweight supercars and heavier SUVs.

Boundary Capital first invested in the business in June 2015, subsequently providing further funding in September 2017. The position is now valued at 0.57x the original investment. More recent funding rounds led by Puma Investments have reflected improving conditions and show significant uplifts in the unrealised valuation. Past performance is not a guide to the future.

Boundary Capital – Image ScanImage Scan – example of previous exit

Image Scan is an AIM-quoted company specialising in portable X-Ray devices Its products are primarily used in the security industry, allowing packages and products to be scanned in mailrooms, airports and events, as well as for industrial quality control in manufacturing.

Boundary Capital originally invested £225,000 in the company in August 2014, following the appointment of new CEO Bill Mawr. Mr Mawr planned to boost growth through a combination of focused product development and extensions to the group’s distribution network.

Over the next four financial years (FY14 to FY18 ) the group saw average annual revenue growth of over 12%. Boundary exited the bulk of its holding in Image Scan in 2018, realising returns of £679,725, and retaining a stake currently valued at £28,971, representing an overall return of 3.15x (November 2021). Past performance is not a guide to the future.

Toxibact – example of previous failure 

As is to be expected with early-stage investing, not all investments are successful. Toxibact is one such example. 

Toxibact was developing a disruptive technology with the potential to kill a wide range of microorganisms, including bacteria and fungi, with little prospect of them being able to develop resistance. Boundary invested nearly £120,000 in the company in March 2016. However, the company has since been wound up, with Boundary recovering around £24,000 of its investment.

Performance

As at the end of November 2021, Boundary Capital has made 15 investments in 10 companies it believes would have qualified for the Impact Life Fund’s selection criteria. Of those, two have achieved a full or partial exit , whilst one has achieved a realised return of over 3x – past performance is not a guide to the future. 

The chart below shows the average performance of those impact investments per £100 invested each tax year, based on valuations as at 17 November 2021. Please note, this performance is based on a small sample of investments, with some years reflecting the performance of a single investment. This is substantially different from the fund’s portfolio size targets. Individual investor portfolios’ performance will deviate from the average.

Boundary Capital's impact-qualifying EIS investments – performance per £100 invested in each tax year

Source: Boundary Capital, as at 17 Nov 2021. Performance figures are supplied by Boundary Capital and are net of all fees, based on Boundary Capital’s valuation methodology. Past performance is no guide to future performance. In the above examples, initial tax relief of up to 30% could also apply – remember tax rules can change and tax benefits depend on circumstances.

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 / SEIS investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Tax rules can change and benefits depend on circumstances.

This EIS fund invests in early-stage businesses which are more likely to fail than larger ones. So you should expect a number of failures in the portfolio, or even be prepared for all companies to fail.

Future funding rounds may dilute existing investments. 

Exits could take considerably longer than three years: equally an early exit could result in a loss of tax relief. Equally an early exit could affect EIS relief.

To maintain KI approved status, the fund needs to comply with requirements set out by HMRC. Should the fund fail to do so, it will impact investor tax relief. There is a minimum fundraise of £600k (lowered from £1 million) to be reached before the fund close on 30 March 2022.

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.

Investor charges
Full initial charge 5.5%
Wealth Club initial saving
Net initial charge through Wealth Club See details
Annual management charge
Administration charge
Performance fee 20%
Investee company charges
Initial charge 5.5%
Annual charge 2%
All fees and charges are stated exclusive of VAT, which may be applicable in some cases. Any fees and charges payable by the investee companies or the underlying businesses do not directly come out of your investment. However, they will effectively reduce the returns generated by investee companies and therefore impact your investment.

More detail on the charges

Timing of the offer

EIS5 certificates are expected to be issued once at least 90% of the capital has been deployed. Boundary Capital aims to deploy funds raised within 18 to 24 months from the closing date of the fund. Please note: these timings are not guarantee and are subject to the fund raising its minimum fundraising target before the close. 

Our view

Since launching in 2013, Boundary Capital has invested £2.1 million in 10 EIS and SEIS-qualifying companies which it believes meet the fund’s impact selection criteria. Boundary Capital is one of the smallest EIS funds managers available, both in terms of funds raised, and the size of the investment team.

Boundary Capital’s ‘Equivalent Lives Impacted’ analysis sets the fund apart from its peers. The fund may appeal to investors who want to invest in an EIS fund with an impact selection criteria.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

The details

Type
Fund
Sector
ESG (Environmental, Social, Governance)
Target return
-
Funds raised / sought
-
Minimum investment
-
Deadline
CLOSED
Last updated: 8 March 2022

News about EIS Investments. Read all