Filament EIS

High-growth SaaS deal-origination and data platform with £1.65m ARR, used by 15 top private equity firms managing $200bn+

The private equity (PE) industry has grown exponentially over the last decade. In 2017 for the first time, private markets overtook their public counterpart in terms of capital raised in the US. Now, after two years of slow dealmaking activity, the industry reportedly has around $3.9 trillion ready to deploy – and is under increasing pressure to do so.

With so much committed capital waiting on the sidelines but fewer deals, it is expected more than ever PE firms will need to originate their own off-market transactions to generate the best returns.

Historically, the PE industry has relied on partners networking and analysts scouring and reviewing data from a multitude of sources to originate deals. However, with the proliferation of new businesses and technologies and the sheer volume of data – difficult even for the largest analyst team to fully evaluate – PE firms are starting to turn to technology.

Filament Topco Limited (“Filament” or “the Company”) developed a first-of-its-kind platform, Syfter, to address this. Syfter uses machine learning to help investment teams originate deals and track market signals in a fraction of the time. The platform is already used by major European investment firms with more than $200 billion of assets under management (AUM)  in aggregate and core client retention rate of 100%.

Co-founder Phil Westcott previously ran IBM Watson (IBM’s AI platform) in Europe and is supported by a team of skilled software engineers and data scientists, as well as a Chair and Non-Exec who both have specialist experience in building high-growth companies and working with early-stage software businesses. 

The Company is also supported by existing investors, including Mark Goodyear, former CTO of Accenture, and Duncan McIntyre, former Chief Executive and major shareholder of Morse plc – a technology company he grew to a £500 million market leader – and former Chairman of Monitise plc.

Filament is currently generating £1.65 million annual recurring revenue (ARR), having grown 76% from the previous year and secured its first two US clients.  With a qualified pipeline of over £16 million, management believes it is on track to deliver £2.9 million ARR 12 months from the end of the round – not guaranteed.

Bootstrapped from 2018 to 2023, Filament was profitable in each of these years – with profits reinvested into the development of the Syfter platform and the growth of the business. In 2023 the business raised £2.8 million external capital in an overfunded round to accelerate growth.

Now the business aims to raise a further £1 million under EIS. Capital raised in this round is expected to be used to deliver £2.9 million ARR by the end of Year 1 and return to monthly profitability in Year 2 – not guaranteed. The minimum investment is £21,800 (new investors; no minimum for existing investors) and you can apply online. 

Predicated on successfully raising funds, the Company is forecasting ARR of £14 million and EBITDA of £5.6 million after four years and targets mid-case returns of 7x (63% IRR) after performance fees but before EIS relief – high risk and not guaranteed.

The deal at a glance

Company by numbers

• 15 customers with more than $200 billion AUM 
  
• 100% core customer retention
• £1.65 million ARR
• £16 million pipeline
• Clients have deployed more than £120 million into deals originated from Syfter
• Average annual contract value: £150k
• Average signed contract length: 12 months
• Average onboarding time: 2 weeks
• Investment to date by management: £0.9 million 

Risks – important

This is a single company offer with no diversification. It involves investing in an early-stage, loss-making business, which is by nature high risk and prone to failure. There is a risk that the capital raised may not be sufficient to achieve the Company’s objectives. You could lose all the amount you invest.

Like all investments available through Wealth Club, it is only for experienced investors happy to make their own investment decisions without advice.

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. The value of tax benefits depends on circumstances and tax rules can change. 

Before you invest, please carefully read the Information Memorandum which contains further details on the considerable risks – alongside the Wealth Club Risks and Commitments.

Fees and structure

Investors will pay no direct initial or ongoing charges to invest. Fundraising costs are being met by the Company. Wealth Club will be entitled to a performance fee on exit. 

Wealth Club investors will invest using a nominee structure. This service is provided by Wealth Club’s subsidiary companies Wealth Club Asset Management Limited (authorised and regulated by the FCA) and Wealth Club Nominees Limited. Wealth Club Nominees Ltd will be completing the share subscription documentation on investors’ behalf.

Please refer to the Schedule of Charges for more details on charges.

All the services Wealth Club and, where applicable, its subsidiaries provide are governed by the Terms and Conditions of the Wealth Club Services.

Our view

This experienced team, with a track record of previous successes in similar fields, has developed a product that has received initial validation from the market and generated cash and profits. 

It is operating in a rapidly growing market and could offer PE firms a crucial competitive advantage.

PE firms are starting to showcase their data technology abilities during fundraising as a means of grabbing the attention of potential large investors. The ability to scale research and monitoring by investing in data could be a valuable differentiator and provide comfort they will seek to use investors’ money smartly.

This trend appears set to continue. As an early entrant, Filament could be well positioned to grow and take a market-leading position.

We consider this to be a compelling, albeit high-risk, EIS investment opportunity although as usual you should form your own view.

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.