Jenson EIS Fund

The Jenson EIS Fund was established in 2015 by Jenson Funding Partners (“JFP”) with the primary aim of supporting follow-on opportunities from its growing portfolio of SEIS companies. 

A key part of the fund’s strategy is to target what JFB describes as the “EIS equity gap”, the stage between SEIS and later-stage EIS/Pre-Series A funding rounds. Companies at this point are typically just beginning to gain commercial traction and require funding and support to continue scaling the business. 

To date, the Jenson EIS Funds have invested £3.1 million into 19 portfolio companies (all but one existing SEIS investments). The fund recently achieved its first exit, delivering a return of 2.54x the gross investment costs (including performance fees and excluding the effects of any tax reliefs). Please note, past performance is not a guide to the future and these are early-stage companies, which can and do fail. The portfolio failure rate is approximately 21% across 19 companies (as at February 2021). 

Important: The information on this website is for experienced investors. It is not advice nor a research or 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, so you could get back less than you invest.

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Highlights

  • Generalist EIS with a preference for technology businesses within the "EIS equity gap"
  • First exit achieved in 2021
  • Target return of £1.85x over a period of 5-7 years (not guaranteed)
  • Aims to invest in 8 - 12 companies, sourced mainly from JFP's SEIS portfolio
  • Evergreen fund
  • Minimum investment £10,000 - you can apply online

The manager

Jenson Solutions Ltd (“JSL”) was established in 2001 by Paul Jenkinson and Sarah Barber to provide strategic, financial, and operational solutions to small businesses. In response to the introduction of the Seed Investment Enterprise Scheme, the pair then set up Jenson Funding Partners (“JFP”) in 2012, to raise capital for early-stage businesses. 

Since then, JFP has launched seven SEIS and five EIS funds, deploying £17 million into over 100 businesses in total. 

The funds are managed by a core team of seven, led by Sarah Barber and Jeffrey Faustin. Mr Faustin has a background in engineering and made the transition to finance after completing an MBA in 2012 . He joined JFP in 2013 and is now Chief Investment Officer and Partner, he is responsible for managing all aspects of the fund. 

Investment strategy

JFP is a long-term investor focused on supporting companies from initial seed funding through to growth capital. The EIS fund will concentrate on companies from its existing SEIS portfolio: only those that show consistent and significant progress in the manager’s view will be ‘graduated’ into the EIS fund. The fund may also consider follow-on investments and investments into businesses not previously backed by JFP. 

A key part of the fund’s strategy is to target the “EIS equity gap”, the stage between SEIS and later stage EIS/Pre-Series A funding rounds. Companies at this point are typically just beginning to gain commercial traction and require funding and support to continue scaling the business.

There are four key stages:

Identify (Dealflow) – JFP will source deals directly and from its extensive network of incubators and accelerators, universities, corporate finance houses, professional services providers, VC and PE houses.

Assess (Criteria) – JFP favours businesses addressing market gaps and with scalable business models run by ambitious and driven entrepreneurs. 

Select (Investment process) – All potential investee companies are required to make two presentations: first to the selection committee and, if successful, to JFP’s approval committee. JFP also conducts extensive pre-selection assessment, interviewing the management teams over a series of calls and meetings to determine their suitability for the fund. 

Monitoring and Support – Post-investment, a JFP portfolio manager or a nominated non-exec director attends board and senior management meetings. Regular contact allows the team to monitor progress and provide support when needed, prepare companies for the next stage of growth as well as help avoid common pitfalls. 

Target return

The fund targets a return of £1.85 for every £1 invested over a period of five to seven years, not guaranteed.

Exit strategy

It is anticipated that any exits will typically take place between four to seven years after investment, though it could take longer. JFP will consider a variety of exit routes including trade sales, listing on a stock exchange, or selling its share of the company to a larger private equity firm . Exit options and timeframes are not guaranteed.

Portfolio

JFP is a generalist investor but it prefers technology-based businesses (currently around 60% of the portfolio). In total, JFP has completed 19 EIS investments since 2015. 

Investors will receive a minimum portfolio of 8-12 companies, with an expected holding period of 5-7 years. JFP expects to investment £50,000 to £500,000 in each deal.    

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. 

Voneus – Jenson EISVoneus

Voneus works with rural communities to provide high-speed broadband across England and Wales.

Founded by telecom veterans, Voneus can connect wirelessly to existing Superfast fibre networks using a series of transmitters. To access the new connection residents simply need to install a small receiver in their home. Current speeds are between 30-50Mbps, which should be more than enough to stream TV, use teleconferencing software or work remotely.

Voneus currently supplies thousands of homes across 50 rural communities. In August 2019, the company received £10 million in funding from Macquarie Capital, which it plans to use to upgrade its network and work towards its target of supplying up to 900,000 homes.

Jenson first invested £150,000 through its SEIS fund in 2013 and has provided an additional £420,000 in EIS funding since then.

FrontM – Jenson EIS FundFrontM

Launched in 2016 , FrontM serves businesses in environments without good internet access. Using its own patented technology, ‘Edge Intelligence’, it can create business and customer applications that work offline and require 70% less satellite data when connected.

The business is looking to address the disparity in internet access for remote spaces. In particular FrontM targets three key markets: airline passengers, cruise passengers and remote workers – an addressable market or more than 4 billion people. 

With the FrontM technology, businesses can create customised services for customers or employees. This can be anything from an inflight journey tracker to a digital workspace for remote workers. 

Jenson first made an investment into the company through its SEIS fund in 2019. It then provided EIS funding later the same year.

Jenson Fund – TwizooTwizoo (example of previous exit)

Please note, the following example is from the Jenson SEIS portfolio. 

Twizoo uses AI technology to automatically capture user-generated content and create real-time reviews. Madeline Parra and John Talbott, the company’s founders, developed the idea after noticing that restaurants received nearly 7 times more exposure on social media than on conventional reviewing platforms.

A mobile application, Twizoo scans and analyses real-time conversations to generate user reviews and sentiment. The technology can be applied to something as simple as suggesting popular bars or restaurants to acting as a social media monitoring platform for businesses.

Jenson originally invested £150,000 into the business through its first SEIS fund. The funding was used to launch a beta version of the product and to prove the business model. As a result, the company was acquired by Skyscanner via a trade sale in November 2017.

Tapfuse (example of previous failure)

As is to be expected with young companies, not all succeed. Mobile application developer Tapfuse is an example. Jenson EIS and SEIS Fund 2 originally invested in 2015. The business created multi-platform applications so that information could be shared in professional and educational institutions.

The business started positively, gaining a number of potential clients and developing a strong sales pipeline. However, it lost momentum due to the founder's personal circumstances. Jenson investigated possible options but ultimately struggled to find a viable alternative.

Eventually, Jenson was outvoted by Tapfuse's other shareholders, and the business was put into administration in December 2018.

Performance

To date, JFP has made 19 EIS investments; the current failure rate in the portfolio is approximately 21%. In 2021, the fund achieved its first exit, delivering a return of 2.54x (including investment costs and excluding tax reliefs). Please note, past performance is not a guide to the future.

The chart below shows the average performance of the total subscribed into the fund each tax year, based on valuations as at 28 February 2021, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.

Source: JFP. 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 of up to 30% could also apply. So, for the tax year 2015/16, the total return including initial tax relief would be £220.39151, 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 / SEIS 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.

Charges 

A summary of the main charges 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 provider documents, including the Key Information Document, for more details.

Investor charges
Full initial charge
Wealth Club initial saving
Net initial charge through Wealth Club
Annual management charge
Administration charge
Performance fee 25%
Investee company charges
Initial charge 6%
Annual fees £350 p/m
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

The fund anticipates taking between 6-12 months to fully deploy investor capital following the closing dates. However, this is not guaranteed, and it may take longer.

Our view

JFP is an active early-stage investor. It has amassed a sizeable investment portfolio of over 100 investee companies in its eight-year history. JFP may, therefore, be seen as a destination for entrepreneurs seeking seed investment, and this could enhance Jenson’s access to deal flow. While the investment team is small in proportion to its 100+ investee company portfolio, JFP has been active in this area for almost a decade and is confident in its ability to continue identifying and supporting promising companies. Investors should note the charges to investee companies, including the mandatory support package: you should form your own view on whether this represents value.

The recent change to the fund’s charging structure is also favourable, offering a more tailored support package to investee companies without a mandatory fee. 

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.

The details

Type
Fund
Sector
Technology
Target return
1.85x
Funds raised / sought
-
Minimum investment
£10,000
Deadline
Discretionary
Last updated: 17 March 2021

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