EMV Capital Evergreen EIS
The EMVC Evergreen EIS fund was launched in 2018 and is the first EIS fund from EMV Capital Ltd.
The fund focuses on investment opportunities within the industrial high-tech, energy, and healthcare sectors. Target companies are expected to be between the seed and series A/B stage and should be developing proprietary hardware or hardware-enabling software.
EMVC will source its deals from its connections of industry partnerships, incubators, and universities. Using its structured filtering process, the fund aims to provide investors with a portfolio of four to six EIS-qualifying companies, not guaranteed.
Since launch, the fund has invested £3.44 million into three companies (Q-Bot, Sofant, and SageTech).
- Aims to invest in technologies that drive advancements of British high-tech industry
- Target return of £3 per £1 invested after six years – not guaranteed
- Investors should hold around four to six EIS qualifying companies
- Experienced team that has previously co-invested alongside international corporates such as ABB Group, Mitsubishi and Philips Lighting
- Minimum investment £10,000
EMV Capital is headed by Dr. Ilian Iliev, who spun it out from EcoMachines Ventures. Ilian leads the investment advisory team and is a board member of a number of EMVC portfolio companies. He holds a PhD from Cambridge University’s Judge Business School; MCom in Economics, and a BA in Politics, Economics and International Relations from the University of Witwatersrand.
The EMV Capital team has a history of investing in technology companies since 2014, this was through EcoMachines Ventures. In total, the team invested into nine companies, of which five were EIS-eligible, however, this is their first EIS fund. Currently the team is relatively small, with just six members, however this is expected to change as the fund recruits to support its growth.
In August 2020, EMV Capital was acquired by AIM-quoted healthcare investor, NetScientific PLC. The move mergers NetScientific's financial base and global relationships with EMVC's investment model. As part of the acquisition, Dr Iliev was appointed CEO of NetScientific and will continue to oversee investment activities. The combined entity had a market capitalisation of £8.8 million (February 2021).
EMV Capital is the investment adviser. The fund manager is Sapphire Capital Partners.
Watch a video interview with Dr Ilian Iliev:
EMV Capital is a specialist investor focusing on B2B companies within the industrial high-tech, energy, and healthcare sectors.
The fund will seek businesses with proprietary innovation in hardware or hardware-enabling software. Any investment should be able to demonstrate a technology or product solution designed for a large and quantifiable market need, interest in the solution from large corporates, and an established core team with relevant experience and expertise.
A key part of EMVC’s strategy is active engagement with corporate entities. EMVC believes these relationships are essential as they could provide access to high-quality deals, co-investment opportunities and potentially a route to exit.
In addition to its corporate partners, EMVC sources deals from its existing network of universities, incubators, and accelerators. Potential companies are assessed through a structured filtering process which evaluates and assigns each company a score based on over 30 different variables. In total, EMVC expects less than 2% of companies to reach the term sheet stage.
EMVC looks to take a hands-on approach with its investee companies. It will tailor support plans for each business, including developing commercialisation strategies, deal syndication, deal syndication, and talent acquisition.
The fund targets a return of £3 per £1 invested after six years, but it may take longer. Please note, returns and timeframes are not guaranteed.
The exit strategy will vary depending on each investment. Due to the fund’s focus, it is anticipated that for most investments, trade sales to corporates or secondary sales to financial investors will be the most likely exit routes, although there are no guarantees.
Due to the nature of this sector, it is possible these investments will require follow-on funding due to larger capital requirements. The time to maturity is also potentially longer, with investments expected to be held for six to eight years.
EMVC targets a portfolio of between four to six companies, it has yet to hit this target. Since launching in 2018, the fund has invested £3.44 million in three companies. The fund will target investments of between £200,000 to £1,000,000 in companies raising at the Seed or Series A-B stages.
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.
Q-Bot develops robots for the building and engineering industry. Its first application is in underfloor insulation for Victorian and early-20th century housing, leading to significant reduction in heat loss and thus heating bills. Q-Bot’s patent-protected solution has already led to relationships with a number of city councils and housing associations.
In May 2019, Q-Bot's insulation technology was approved under the government's Energy Company Obligation 2 scheme. This should allow Q-Bot to secure government funding to subsidise the cost of its service as well as increase the types and number of properties it can access.
EMVC led a £3 million funding round into the company in 2019 alongside Wealth Club investors and Foundamental. Later that year, the company raised a further £3.6 million with backing from French building materials business, Saint-Gobain. The funding will be used to accelerate growth plans, move into new markets, and expand the company’s technology portfolio.
SageTech Medical Equipment
Although an essential part of modern medicine, anaesthetic gases are a significant pollutant. In fact, the global warming potential of some anaesthetic drugs can be up to 2,500 times greater than carbon dioxide.
The main cause of the emission is desflurane, a modern anaesthetic agent and potent greenhouse gas. During a typical anaesthetic procedure, a patient may only metabolise less than 5% of the inhaled gas and the rest is vented back into the atmosphere. This is not only damaging to the environment but inefficient, costing the NHS around £50-£60 million pounds a year.
As a solution, SageTech has developed a patented closed-loop procedure to capture waste agents allowing them to be collected, purified and reused. Additionally, with the use of robotics and automation, SageTech has been able to demonstrate this process at a commercially viable level.
EMVC identified the company through its internal research process and invested in 2019. The company has subsequently run several successful pilots with the NHS and has received industry support from the UK Environment Agency, DEFRA, and the NHS Sustainable Development Unit. SageTech previously closed a £1.3 million funding round in November 2020 and is looking to secure a further £1.6 million in 2021.
Exit and failure examples
EMVC does not currently have any exits or failures within its portfolio. Please note these are early days and due to the nature of early-stage investing, you should anticipate some failures.
As the fund was launched in 2018, the performance track record is limited.
The chart below shows the average performance of the total subscribed into the fund each tax year, based on valuations as at 26 January 2021, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.
Source: EMV Capital as at 26 January 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 could also apply. So, for the tax year 2019/20 the total return including initial tax relief would be £145, 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 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.
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 providers documents, including the Key Information Document, for more details.
Exits could take considerably longer than the three year minimum holding period.
|Full initial charge||0.75%|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||0.75%||Annual management charge||1.05%|
|Performance fee||20%||Investee company charges|
More detail on the charges
Timing of the offer
EMVC anticipates targets full deployment of investor capital within 18 months of subscription. As is typical with EIS investments, it may not be possible to have all funds deployed before a deadline such as the end of the tax year.
EMVC EIS is a specialist fund, targeting B2B companies within the industrial high-tech, energy, and healthcare sectors. Whilst the fund launched in 2018, the investment team ran a similar mandate for a number of years with a prior VC fund.
One of the key features of the fund is EMVC’s corporate relationships, which it hopes to leverage throughout its investment process. These industry connections provide proprietary deal flow, sector expertise, and valuable industry networks. The acquisition of EMVC by NetScientific Plc should build on EMVC’s network and add to its financial base.
Investors should note the fund has made investments into three investee companies since launching in 2018. The deployment of capital across the stated target of four to six investee companies may take longer than anticipated.
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.
- Environmental Technology
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