Haatch Ventures EIS 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 14 companies backed by Haatch since 2013, there has been one outstanding exit, alongside three failures. Seven portfolio companies are currently performing well and are valued at an average of 5.5x their original cost, based on the latest funding round. Three recent investments made in 2019 and 2020 are valued at 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 invested in excess of £700k of their own money into the EIS fund to date
- ‘Smart Money’ investment approach
- Targets four to six investee companies
- Aims to be fully invested within 18 months – not guaranteed
- Target return of £10 per £1 invested – not guaranteed
- Simple charging structure
- Next allotment 30 June 2020
- Minimum investment £5,000, you can apply online.
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 businesses 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 Director 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 excess of £700k into the EIS fund to date and plan to continue to invest in further tranches.
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 part of the original Kiddicare start-up program.
3. ‘Smart Money’
Haatch has what it calls a ‘Smart Money’ approach that uses the experience of its team to add value to its investee companies
Haatch becomes a corporate director of each investee company, so any one member of the investment team can attend board meetings and lend their complementary set of skills and expertise as needed.
In addition, 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.
Poplar (Recent investment)
Poplar, launched by former Netflix and Google execs, is a platform that allows users to create AR (Augmented Reality) experiences fast and affordably. AR is touted as the next frontier for content. The world’s largest tech companies are pouring hundreds of millions into research and development in the space, while AR-focused start-ups such as Magic Leap have become some of the best-funded in the world.
Poplar is riding that wave by building the first true community platform for AR content creators and in doing so, is aiming to put itself at the very centre of the opportunity. Multiple monetisation avenues are being explored, with revenue already being driven from brands such as William Hill, King Games, L’Oreal and Disney testing AR campaigns. Poplar’s management team should be well placed to make the most of the opportunity, with both the CEO and CTO embedded in the space through their past work with YouTube Space and the gaming communities.
Haatch invested in Poplar in 2019 as part of a £500,000 investment round. Following a recent funding round, the holding is currently valued at a 3.8x multiple of its original cost.
Initially backed by Haatch Angel in 2017, Buymie received follow-on funding from Haatch Ventures EIS fund is 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 with its launches in Dublin and subsequently in the UK (Bristol launched in April 2020 and other cities are planned to follow this year) by providing retail experience, introductions and product advisory support. 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.
To date, Haatch has invested a total of €407,000 into Buymie. The initial investment is currently valued at a 4x its original cost, based on the latest funding round valuation. Past performance is not a guide to the future.
Snapd (example of a 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 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.
The EIS fund launched in 2018, therefore its performance track record is limited.
Of the 14 companies backed by Haatch overall since 2013, across both Haatch Angel and Haatch Ventures, there has been one exit (for an unusual 276x multiple) alongside three failures. Seven portfolio companies are performing well and are valued at an average of 5.5x their original cost based on the latest funding round. Three recent investments made in 2019 and 2020 are valued at cost. Past performance is not a guide to the future.
Source: Haatch Ventures LLP, as at 30 April 2020. 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. So, for the tax year 2018/19, the total return including initial tax relief would be £170 – 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.
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 18 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 deadline for the next tranche is 30 June 2020.
In our view, this is an attractive, although high-risk, EIS offer. The team is made up 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: many 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.
This is 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 June 2020 for current tranche