Haatch Ventures EIS Fund
£500k capacity – tranche for accelerated deployment, deadline 30 July
Haatch Ventures has lined up four companies for targeted accelerated deployment by the end of August (you can download the Pipeline Overview document for more information) – not guaranteed. The tranche has just been extended, as Haatch Ventures was able to secure a larger investment into those companies. There is now £500k capacity – the deadline is Friday 30 July when the tranche closes.
Please note, whilst Haatch Ventures has every intention of deploying funds into the companies mentioned, deals can fall through, so exposure to all or any of these companies is not guaranteed. The company information included in the overview has been prepared by Haatch Ventures and has not been verified by Wealth Club.
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 27 companies backed by Haatch since 2013, there has been one outstanding exit, alongside three failures. The remaining portfolio companies are said to be performing well. Nine of them have raised further funding, achieving an average 4x unrealised uplift on the original investment cost. Past performance is not a guide to the future.
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- Focus on early-stage disruptive digital businesses
- Managed by a team of four successful entrepreneurs
- Co-invest with the four partners, who have personally accounted for 12% 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 – please note, you will also need to become an “elective professional client” of Haatch Ventures before your investment is accepted
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.
Kiddicare was at that time a world leader in technology and worked closely with selected worldwide start-ups – 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 Hardware Partnerships at Google for APAC 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 12% of the total assets within the fund. The team plans to continue to invest in further tranches.
In March 2021, Haatch Ventures launched its first SEIS fund. The fund was fully subscribed, having raised a total of £2.1 million in two weeks, and closed at the end of the 2020/21 tax year. The SEIS fund may provide the EIS fund with additional deal flow, although this is not guaranteed.
Watch a video interview with Haatch Ventures co-founder Scott Weavers-Wright:
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.
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.
Haatch invests in highly scalable digital companies to which it believes its Smart Money approach will add value to 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.
The fund aims to invest in between 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 (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 business was born out of the founder’s frustration with getting the right offshore development partners for their previous startup, a marketplace for hairdressers.
They felt existing processes are 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 pre-seed round, when the business was generating £50k in monthly revenue. In September 2020, Haatch participated in a £750k seed investment round which valued the business at £5.1 million (pre-money). In December 2020, Deazy achieved £260k monthly revenue. Past performance is not a guide to the future.
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, in return for a delivery fee.
Buymie can be seen as a good example of the kind of business Haatch invests in and supports: one with a great minimum viable product and opportunity to scale through technology. The Haatch team is heavily supporting the business – including practical help when pitching to key potential clients. Buymie launched in Dublin then Bristol (April 2020) and Cork (August 2020), with further launches planned. The last year has seen Buymie announce a multi-year, first-of-its-kind, partnership with Lidl, enabling one of the largest European retailers to challenge the market with new on-demand delivery. In late 2020 Buymie announced a partnership with Dunnes, Ireland's largest grocer, enabling Dunnes customers to order online for the first time.
To date, Haatch Ventures has invested a total of £861,893 into Buymie. The initial investment is currently valued at a 4x its original cost, based on the latest funding round valuation. Buymie grew revenue by over 300% in 2020 compared to 2019. Past performance is not a guide to the future.
Example of previous exit
The EIS fund launched in 2018 and has not experienced any exits to date. However, 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 a number of 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 the Elevaate is also the founder of Haatch. The £30,000 invested acquired a large initial stake in the business and qualified for SEIS relief.
Snapd (example of previous failure)
As with any EIS company, these are high-risk investments and not all will work out as planned. Snapd is an example of a failure. Snapd created a photo-messaging app allowing friends to send snaps and capture their reactions as they view the image. Haatch loved the concept; however, it quickly became apparent the founders were not dedicated to the project. The business was written off in 2015.
The EIS fund launched in 2018, therefore its performance track record is limited.
Of the 22 companies backed by Haatch since 2013, there has been one outstanding exit, alongside three failures. The remaining portfolio companies are said to be performing well. Nine of them have raised further funding, achieving an average 4.9x unrealised uplift on the original investment cost. Past performance is not a guide to the future.
The chart below shows the average performance of the total subscribed into the funds each tax year, based on valuations as at 9 June 2021, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.
Source: Haatch Ventures LLP, as at 9 June 2021. 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 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.
Exit could take considerably longer than the three year minimum holding period.
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.
|Full initial charge||10%|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||10%||Annual management charge||—|
|Performance fee||25–30%||Investee company charges|
|Initial charge||—||Annual charge||—|
More detail on the charges
Timing of the offer
The Haatch Ventures EIS Fund aims to fully deploy the money within 12 months at most, but expects to be able to do so in a shorter period – not guaranteed.
The fund aims to regularly close tranches, usually every three to six months.
The next tranche deadline is 30 July 2021.
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 no 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 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
- £500,000 sought
- Minimum investment
- 30 Jul 2021 for next tranche