Calculus Knowledge Intensive EIS Fund III

Calculus Capital launched the first EIS fund in 1999, giving the management team one of the longest track records in the EIS industry.

The Calculus EIS fund has invested £162.7 million into 61 companies since adopting its current strategy in 2013/14. These investments have generated exit proceeds worth £117.9 million, with a remaining portfolio balance of £77.9 million. Past performance is not a guide to the future.

The Fund seeks to invest in companies in the technology and healthcare sectors but, unlike Calculus’s EIS fund, it will not invest in the entertainment sector.

This is the third ‘KI-approved fund’ from Calculus. As it closes this tax year, investors should be able to obtain tax relief for 2024/25 and have the option to carry back to 2023/24 (tax rules can change and benefits depend on circumstances).

• Approved KI EIS fund
• Target return of 2x over 4-7 years – not guaranteed
• Targets a portfolio of at least six companies, deploying investors funds over 12-15 months
• £25,000 minimum investment

Calculus Capital’s CEO, John Glencross, and Executive Chairman, Susan McDonald, made their first EIS investment in 1996. They founded Calculus Capital in 1999 and shortly after launched the UK’s first approved EIS fund. Calculus now manages £170 million in tax-efficient investments, across its EIS funds and VCT, all managed by the same investment team.

The investment team is co-led by Alexander Crawford and Richard Moore who are responsible for sourcing and executing new deals, as well as advising portfolio companies. They are supported by a wider team of eight, including Dominic Harris, who acts as Head of Portfolio Management and Life Sciences specialist and Investment Director Elizabeth Klein.

Before your subscription is invested, the cash will be held by Calculus as the custodian. Calculus also acts as the nominee after investment.

The Calculus Knowledge Intensive EIS Fund III follows a broadly similar investment strategy to the Calculus EIS Fund – albeit without a focus on the entertainment sector.

It targets revenue-generating companies with proven products and established business models, managed by an adaptable and experienced management team and with a clear route to exit.

The investment team targets fast-growing areas of the technology and healthcare sectors, where it believes the most compelling opportunities can be found.

A large proportion of investments are sourced from Calculus’s investor base and management teams it has successfully backed in the past. Calculus Capital also benefits from its longstanding industry experience and its investment team’s personal networks of lawyers, advisers, and brokers.

On average, the investment team assesses over 700 deals a year with 1-2% of these making it through the selection process. When reviewing a deal, Calculus conducts its own comprehensive research then brings in external parties for in-depth financial, legal, and commercial due diligence.

Once investments are made, Calculus aims to mitigate risk with a hands-on approach. Calculus usually takes a board seat and will monitor performance closely through monthly management accounts. The manager also encourages portfolio companies to adopt strategies aligned with a transition to a more sustainable economy, including reducing energy consumption and promoting high standards of business ethics.

Since adopting its current strategy in 2013/2014, the Calculus EIS Fund has invested £162.7 million in 61 companies (January 2025).

Investors in the Calculus KI EIS Fund III can expect a portfolio of at least six companies, split between the technology and healthcare sectors.

The companies outlined below are historic investments made by the Calculus KI EIS Fund in its previous iteration and give a flavour of the types of companies a new investor might expect.

As is to be expected, not all investments work out, an example is Arcis Biotechnology Holdings (“Arcis”).

Arcis manufactured DNA extraction kits to collect genetic material from samples in under three minutes, significantly quicker than current laboratory standards.

Calculus invested a total of £5.6 million through its EIS Fund. The company showed early traction, including an exclusive licence agreement with Teleflex, a multi-billion-dollar US listed business. However, demand declined after the end of the Covid-19 pandemic and administrators were appointed in September 2022. Calculus’s investment was written down to nil.

The first Calculus KI EIS Fund made its first investment in September 2023, so its performance track record remains limited.

The chart below shows the performance of the Calculus EIS fund, which follows a similar strategy. The Calculus EIS fund has invested £162.7 million in 61 companies since 2013/14. There have been 30 exits, of which 12 were profitable with an average exit multiple of 2.78x. Exit proceeds total £117.9 million, and the remaining portfolio is valued at £77.9 million.

The chart below shows the average performance of the total subscribed into the funds each in each of the last 10 full tax years (or from when the current strategy was adopted if later). 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.

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, for a knowledge intensive EIS fund you will need an EIS5 certificate. 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. Tax reliefs depend on the portfolio companies maintaining their EIS-qualifying status. For capital gains tax deferral and inheritance tax relief the investment date is when the capital is invested in each company, not the fund close date. 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.

While this is only the third iteration of Calculus’s Knowledge Intensive funds, Calculus is one of the longest-standing EIS fund managers. The fund follows an investment strategy that has been well rehearsed within the existing Calculus EIS fund and VCT. The KI Fund structure has the added advantage of greater clarity on the timing of income tax relief and a single tax certificate.

Calculus’s well established market position has helped the team raise and deploy a sizeable amount of capital in the last 20 years. Under its current strategy, adopted in 2013/14, it has achieved 12 profitable exits, resulting in a stream of realised returns – past performance is not a guide to the future.

This financial promotion has been communicated and approved by Wealth Club Ltd on 11 February 2025

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.