British Robotics Scale-Up Fund
The British Robotics Scale-Up Fund looks to invest in the most promising companies from the British Robotics Sidecar (SEIS) Fund, in the manager’s view. This offer will target businesses operating purely within the UK robotics sector, with a particular emphasis on automation technology. The Scale-Up Fund will support companies as they transition from research and development to commercialisation of a final product.
It is expected most opportunities will be sourced from the British Robotics Sidecar (SEIS) portfolio, although the investment team will consider any appropriate deal. To date, the Scale-Up Fund has invested in 16 companies, all of which had previously received SEIS funding.
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- Fast-growing sector, capitalising on Britain’s strength in robotics development
- EIS offer targeting robotics companies that have demonstrated market traction
- A minimum portfolio of six companies, not guaranteed
- Investee companies must have advance assurance
- Targeting 3x return before tax relief – not guaranteed
- Minimum investment £10,000 – you can apply online
The British Robotics funds are managed by Sapphire Capital Partners LLP. High Growth Robotics (“HGR”), a company focused on supporting UK robotics start-ups, will assist in the investment screening as well as providing mentors to investee companies.
HGR was founded by Dominic Keen in 2016 and has mentored all of the British Robotics funds to date.
An engineer by trade, Dominic has been advising early-stage technology companies for over two decades. He began his career assisting technology start-ups with go-to-market strategies before becoming Head of Venturing at Egg, the UK’s first internet bank . In 2006, Dominic left Egg to co-found MoPowered (which later became mporium), a mobile commerce business. He was its CEO for almost a decade and led the company through its IPO in 2013 until its acquisition of Fast Web Media Ltd in 2015. Just over a year later, Dominic founded High Growth Robotics.
Dominic is supported by Alex Pejacsevich. Alex acts as investment manager and is primarily responsible for deal sourcing and portfolio management within the SEIS funds. Additionally, he has legal training that should enable him to assist companies with any legal or governance issues.
The team also has access to four independent venture partners who have significant technical and industry experience. They will help with sourcing deals as well as assisting and mentoring portfolio companies.
Mr Keen has also recently established RAIA Ventures which will act as an extension of British Robotics. The RAIA fund is capable of taking investments which sit outside of the UK tax-wrappers and could offer an additional source of follow-on funding for what he considers to be the best performing portfolio companies.
Meet the manager – watch our interview with Dominic Keen:
Across the globe, the robotics industry is reaching a tipping point. It is now in some cases cheaper to own, operate and maintain a robotics system than it is to use manual labour. Consequently, the adoption of automation and improved productivity is becoming increasingly attractive, particularly to industries such as agriculture and construction which face rising labour costs.
To target these sectors, the fund aims to invest in companies developing tangible hardware that is capable of solving common workplace problems. At this stage, the companies are expected to be market-ready and should already be generating revenues.
The fund will rely heavily on the British Robotics SEIS funds to provide most, if not all, investment opportunities. To graduate into the EIS fund, the investment team has to be comfortable that the founding team is capable of hitting its targets and continuing to scale the business. By this point, the fund should be familiar with the companies’ management teams, allowing for an additional layer of due diligence not often available to externally sourced deals.
Once a company graduates to the EIS fund, the investment team will devote considerable resources to helping it develop the business model and the go-to-market strategy. To help drive commercial success, companies will be mentored on establishing a strong sales and deal pipeline as well as securing additional funding.
The fund targets a return of £3 per £1 invested over six years, not guaranteed.
It should be noted that while the EIS and SEIS fund have the same target returns, the underlying assumptions differ. Within the SEIS portfolio, it is expected that companies may achieve greater returns due to the relatively low entry valuation, however, this is balanced by a higher expected failure rate. The converse is true of the EIS fund, with lower failure rates and lower growth potential expected (not guaranteed).
As these companies will be very early stage, it is anticipated that the average hold period should be approximately six years, although it could be longer. The most likely exit routes are likely to be a trade sale but other methods such as an IPO may be available.
To date, there have been no exits or failures. However, these are high-risk investments so you should expect a number of failures in the portfolio.
Since launching in 2019, the Scale-Up EIS Fund has invested in 16 companies, all of which previously received SEIS funding from British Robotics.
Investors are expected to receive a portfolio of between 6 and 12 companies, with a minimum of six. As with the SEIS portfolios, the investment team will try to diversify the EIS fund through a range of sectors and different applications where possible. However, given the limited deal flow (predominantly the SEIS fund investee companies) this may prove more difficult at the EIS level.
Below are portfolio company examples from previous iterations of the British Robotics funds. Please note, new investors may have exposure to different companies.
Based on research from the University of Bristol, QLM has developed a patent-pending quantum gas detection camera that can detect methane gas leaks, a billion-dollar market. Its unique technology means it is highly sensitive, long-range, and can precisely map gas leak locations and flow rates.
Methane is a potent greenhouse gas and has more than 80x the warming power of CO2 in the near term. One of the largest contributors of methane pollution is the oil and gas industry. As part of a raft of new regulation changes, the industry has committed to reduce and report emissions and therefore requires more effective monitoring techniques. QLM’s technology offers an industrially scalable solution which enhances compliance and emissions reduction when compared to previous labour-intensive methods.
British Robotics first invested in QLM via its SEIS fund in 2018. In 2021, QLM was named as one of the winners of Bloomberg’s Pioneers program, which seeks to identify early-stage leading innovators driving the low-carbon transition. Shortly after, QLM closed a £3.1 million seed funding round which included Green Angel Syndicate, Newable Ventures, the Development Bank of Wales, and British Robotics.
Across the globe, it is estimated that around 5 billion people use messaging apps every month. However, despite this popularity, many companies still restrict their communications to websites or separate applications.
To solve this problem, Futr has developed its own ‘chatbot’ which integrates directly with popular messaging apps (like WhatsApp) and voice devices (like Alexa). Not only are its products more accessible to consumers but it has designed its own natural language software, allowing users to simply ‘chat’ their requests.
Its first product, Chatamo, is a self-service platform that can generate a chatbot for sales and services within minutes. Its plug-and-play functionality removes the need for technical expertise while offering almost immediate 24/7 customer support. Alongside this, Futr has secured a number of project contracts within the public sector such as ‘botifying’ the 101 service for some police forces. The company fully launched its enterprise-grade system in May 2020 and has since steadily secured clients through a subscription model. Futr is forecasting annualised recurrent revenues of over £1 million by the end of 2021.
British Robotics first invested through its SEIS fund in 2017 and has since co-invested in a £2.4 million EIS funding round led by Praetura Ventures.
Exit and failure examples
To date, the fund has not achieved any exits or suffered any failures, however, this is partly due to the fact it is still a relatively young portfolio.
The chart shows the average performance of the total subscribed into the British Robotics Scale Up EIS fund each tax year, based on valuations as at 16 November 2021, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.
Performance of British Robotics previous EIS funds per £100 invested in each tax year
British Robotics, as at November 2021. Figures are net of all fees. Past performance is no guide to future performance. These figures do not include any realised returns which would be available through loss relief. In the above examples, initial tax relief of up to 50% 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 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.
The offer is reliant on Dominic Keen so there is considerable key-man risk. Sapphire Capital Partners must be able to scrutinise Dominic Keen’s work.
A summary of the main charges 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.
|Full initial charge||—|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||—||Annual management charge||—|
|Performance fee||25%||Investee company charges|
|Annual charges||See below|
More detail on the charges
Timing of the offer
The fund anticipates taking up to 12 months to deploy the majority of investor capital. However, it may take longer to be fully deployed. The fund plans to have quarterly closes. The deadline for the next close is 30 June 2022.
For experienced investors, this could be an interesting addition to a portfolio. The fund is a specialist in its sector and should benefit from the British Robotics SEIS funds acting as a filter for deal flow. While the core team is very small, the fund has a track record of providing investors with a portfolio of promising and very early stage, robotics-based businesses.
The Robotics industry is an exciting and fast-growing space and there have been some real success stories in robotics to date. However, these are very early-stage companies and there are considerable risks.
Read important documents and then apply
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.
- Target return
- Funds raised / sought
- £2.0 million sought
- Minimum investment
- 30 Jun 2022 for 2022/23 allotment