Haatch Ventures Enterprise Investment Fund

The Haatch Ventures EIS Fund is managed by four successful entrepreneurs who have between them founded, grown and sold businesses worth over $150 million. 

The fund aims to back four to six early-stage digital transformation businesses in sectors the team knows well, such as software-as-a-service, on-demand, gig-economy and digital consumer. The team will invest where it believes it can use its considerable experience to add value. Haatch refers to this as its ‘Smart Money’ approach. 

This EIS fund, run by Haatch Ventures, was launched in 2018. Haatch’s previous investments were made through an angel co-investment joint venture called Haatch Angel, using the same investment strategy. Of the 56 companies backed by Haatch since 2013, one has achieved an outstanding exit while another achieved a more modest exit and there have been four failures. Of the remaining portfolio 31 are valued at cost and 21 are showing an average uplift of 3.2x.

For applications and cleared funds received by 30 June 2022, Haatch intends to fully deploy investors' capital by the end of the 2022/23 tax year – not guaranteed.

Important: The information on this website is for experienced investors. It is not a personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value: you could lose all the money you invest.

Read important documents and then apply

Highlights

  • Focus on young disruptive digital businesses 
  • Managed by a team of four successful entrepreneurs
  • Co-invest with the four partners, who have personally accounted for 13.4% of the investment into the EIS fund to date 
  • "Smart Money" investment approach
  • Targets four to six investee companies
  • Aims to be fully invested within 12 months – not guaranteed
  • Target return of £10 per £1 invested – high risk and not guaranteed
  • Simple charging structure
  • Minimum investment £10,000
  • You can apply online 

The manager

Haatch’s history goes back to 2013 when Scott Weavers-Wright and Fred Soneya started an angel co-investment joint venture called Haatch Angel. Haatch Ventures LLP launched in 2018 to manage the EIS fund. 

Scott and Fred met when working at Kiddicare.com, an online baby care retailer co-founded by Scott, which grew to become one of the UK’s largest e-commerce businesses. In 2011 Kiddicare.com was acquired by supermarket Morrisons for £70 million, with the intention of using Kiddicare’s technology platform to develop Morrisons’ online offering. 

Post-acquisition, Scott became the Chief Architect and Managing Director of Morrisons.com, whilst Fred was responsible for a number of high-profile, large-scale innovation projects. 

At the time, Kiddicare worked closely with selected start-ups across the globe – a community known as the Kiddicare start-up program – many of which subsequently became very successful, with three achieving exits in excess of $1 billion.

Haatch Angel was founded on the back of that program, essentially as a vehicle for Scott’s and Fred’s angel investments. 

Shortly after starting Haatch, Scott also founded retail cloud platform Elevaate in 2014. Its technology allows suppliers and online retailers to manage online promotional activity. The business was founded with a £30,000 investment and was sold four years later for $25.7 million to Quotient Technology Inc, a US-listed technology business based in Mountain View, California.

Haatch Ventures, founded in 2018, is an extension of Scott’s and Fred’s angel investing under the Haatch Angel brand. It was set up to enable investors to benefit from their knowledge and experience of investing in disruptive UK technology with the benefit of EIS relief. 

Haatch Ventures investment team consists of four experienced entrepreneurs – Scott, Fred, plus Simon Penson and Mark Bennett. Collectively they have built and sold businesses worth more than $150 million. 

Simon joined Haatch in 2019 and is best known for starting content marketing agency Zazzle Media. In under six years, and as the sole founder, Simon grew the business from the corner of his living room into an international media agency. The business merged with another agency, Stickyeyes, in 2015 to form the UK’s largest independent search and content marketing agency. The following year the merged business was sold to one of the world’s largest media agencies in a deal worth up to £37 million. Simon is now working full-time with Haatch Ventures, using his wealth of experience in marketing and building profitable start-ups to add value to the Haatch portfolio.

Mark is Vice President of Android GTM at Google and previously led the international business for Google Play. Before this Mark was managing director of Blinkbox Music, the music streaming service, which he helped grow to 2.5 million users in 18 months. Mark is a partner in the fund and will use his scaling-up experience to add value to the Haatch portfolio.

The four partners have invested in each of the EIS fund tranches to date, and currently account for 13.4% of the total assets within the fund. The team plans to continue to invest in further tranches. 

Investment strategy

There are three elements to the investment strategy:

1. Digital transformation

Haatch seeks to back entrepreneurs who are building disruptive digital businesses. The team’s core focus is on software-as-a-service, on-demand, gig-economy and digital consumer business models. These are business models the team knows well and to which it can add value as supportive shareholders. 

2. Early stage

Haatch looks to invest at an early stage, with an opportunity to provide follow-on investment into its most promising portfolio companies. The sweet spot is companies with a product and some early traction in the market, much the same as the companies that were part of the original Kiddicare start-up program. 

3. ‘Smart Money’

Haatch becomes a corporate director of each investee company, so any one member of the investment team can attend board meetings. Haatch looks to take an active role and add value to its investments – from supporting investee companies’ pitches to potential clients to using its network and connections to make potentially valuable introductions. Haatch believes its four partners complement each other well: each has a technical product background which enables Haatch to support portfolio companies.

Haatch is in daily communication with its investee businesses. More detailed work is often required at the beginning of an investment when the Haatch team can spend a few days per month with investee companies.

In March 2021, Haatch Ventures launched its first SEIS fund. The SEIS fund may provide the EIS fund with additional deal flow, although this is not guaranteed. Investee companies may also be able to access additional funding through Haatch’s recently Follow-On fund, potentially improving the fund attractiveness to the offer to investee businesses.

Target return

The fund has a target return of 10x after five to seven years, before tax relief. Please note this is a very ambitious target return and is not guaranteed. 

Exit strategy

Haatch invests in highly scalable digital companies where it believes its Smart Money approach can accelerate growth, create significant shareholder value and generate exit opportunities. The expected holding period is between five and seven years (not guaranteed). 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, not guaranteed.

Portfolio

The fund aims to invest in four to six companies. There are no formal restrictions on how much of an investor’s capital can be allocated to any one investee company; however, Haatch looks to create a balanced portfolio. Investments will range from early seed-stage to follow-on opportunities in Haatch portfolio companies. Whilst this is an EIS fund, in exceptional circumstances, due to its early-stage focus, SEIS relief may apply. 

The companies outlined below are historic investments made by the Haatch Ventures EIS Fund in its previous iterations and give a flavour of the types of companies a new investor might expect. EIS funds tend to be managed on a discretionary basis so each individual portfolio is likely to be different.

Deazy – Haatch Ventures EISDeazy (recent investment)

Deazy aims to simplify the process of hiring software developers. It works with all kinds of businesses to provide on-demand web, app and software development solutions. 

The company was born out of the founders’ frustration with getting the right offshore development partners for their previous startup, a marketplace for hairdressers. 

They felt existing processes were opaque, expensive, unreliable and time consuming. Deazy’s online marketplace offers “near-shore” development agencies that cost up to 50% less than UK-based agencies. Prior to onboarding, development teams must pass Deazy’s due diligence, referencing, portfolio review and testing checks. 

Haatch first invested into the business in September 2019 as part of a £350k round at a £1.5 million pre-money valuation. In September 2020, Haatch participated in a £750k seed investment round which valued the business at £5.1 million (pre-money). 

Deazy raised £5 million in a Series A funding round in December 2021, which valued the business at £19.2 million (pre-money). The two Haatch investments are held at 7.9x and 3.1x investment cost. Past performance is not a guide to the future.

Buymie – Haatch Ventures EIS FundBuymie

Initially backed by Haatch Angel in 2017, Buymie received follow-on funding from Haatch Ventures EIS fund in 2019. The start-up has created a mobile marketplace that allows consumers to connect with personal shoppers who will pick up and deliver groceries in as little as one hour for a delivery fee.

Buymie is a good example of the kind of business Haatch invests in and supports: one with a strong minimum viable product and opportunity to scale through technology. The Haatch team is supporting the business with practical help and advice – including when pitching to key potential clients. Buymie has announced a multi-year, first-of-its-kind, partnership with Lidl, and a partnership with Dunnes, Ireland's largest grocer, enabling Dunnes customers to order online for the first time. As a result, 1 in 10 households in Dublin have now purchased from Buymie and the company grew revenue by over 300% in 2020. The business has now expanded to Cork, Limerick, Galway, and Bristol and has identified 200 locations across the UK and Ireland in which it can expand. 

To date, Haatch Ventures has invested a total of £1.8 million. The initial angel investment is currently valued at a 7.8x cost, based on the latest funding round valuation. Past performance is not a guide to the future.

Example of previous exit

Haatch has one notable exit under its belt prior to launching the EIS fund. In 2014, Haatch Angel invested £30,000 into a business called Elevaate, which was founded by Scott Weavers-Wright, the co-founder of Haatch. 

Elevaate’s software increases online monetisation programmes by enhancing relationships between suppliers and online retailers. The company’s technology platform grew to power supplier sponsorship programmes globally and boasted several blue-chip clients and retail technology award wins. The business was acquired by Quotient Technologies for $25.7 million. The original £30,000 investment returned 276x its investment (£8.3 million). Please note, this is an unusual exit example and the founder of Elevaate is also the founder of Haatch. The £30,000 invested acquired a large initial stake in the business and qualified for SEIS relief. 

Josh's Wine List (example of previous failure)

As with any EIS company, these are high-risk investments and not all will work out as planned. Josh’s Wine List (trading as Wine List) is one such example. 

The Wine List set out to build a wine education and subscription company by providing good quality interesting wines.

Haatch backed the business in November 2020 as the lead investor alongside a group of angel investors and appointed Scott Weavers-Wright to the board. Despite achieving £1 million in annual recurring revenue, the business was not able to deliver the level of growth in its subscription business required to raise additional capital and subsequently entered into administration. 

Performance

The EIS fund launched in 2018, therefore its performance track record is limited.

Of the 56 companies backed by Haatch since 2013, one has achieved an outstanding exit while another achieved a more modest return and there have been four failures. Of the remaining portfolio 31 are valued at cost and 21 are showing an average uplift of 3.2x.

The chart below shows the average performance of the total subscribed into the funds each tax year, based on valuations as at 1 April 2022, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.

Performance per £100 invested in each tax year

Source: Haatch Ventures LLP, as at 1 April 2022. Performance figures are supplied by Haatch Ventures and are net of all fees. Past performance is not a guide to future performance. These figures do not include any realised returns (exits) as there have not been any. 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 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. 

Charges

The charging structure of this fund is different from that of most of its peers. There is an investor initial charge of 10% but there are no annual fees or on-going management charges – neither to investors nor investee companies. The manager believes this structure could be more beneficial in the long term.

A summary of the main charges is shown below. 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 10%
Wealth Club initial saving
Net initial charge through Wealth Club 10%
Annual management charge
Administration charge
Dealing charge
Performance fee 25–30%
Investee company charges
Initial charge
Annual charge
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

For applications received by 30 June 2022, Haatch intends to fully deploy investors' capital by the end of the 2022/23 tax year – not guaranteed.

Our view

In our view, this is an attractive way to invest alongside a team of experienced entrepreneurs who have founded, grown and sold businesses, achieving exits worth more than $150 million between them within e-commerce, retail technology, and digital marketing. 

The fund aims to invest in companies at an early stage, in sectors the team knows well, and into businesses to which the team believes it can add value. The Haatch track record is encouraging: a number of Haatch’s earlier investee companies appear to be flourishing. This might suggest the team’s ‘Smart Money’ investment approach is able to add value to investee companies, and could potentially enhance returns for investors, although this is not guaranteed. Past performance is not a guide to the future.

Investors in each tranche will receive a concentrated portfolio of between four to six early-stage disruptive digital businesses. The offer could appeal to experienced investors looking to invest alongside a credible team of experienced entrepreneurs.

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.

The details

Type
Fund
Sector
Technology
Target return
10x
Funds raised / sought
-
Minimum investment
£25,000
Deadline
30 Jun 2022 for 2022/23 allotment
Last updated: 7 April 2022

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