Jenson EIS Fund
Since 2012, Jenson Funding Partners (“JFP”) has invested £16 million into more than 100 companies. An early-stage investor, JFP initially built an SEIS portfolio before launching its first dedicated EIS fund. In total, JFP has launched five SEIS funds and four EIS funds.
A key part of JFP’s EIS strategy is to follow what it considers to be the ‘winners’ from its SEIS portfolio. Specifically, the investment team targets companies it believes have dependable management teams, capable of scaling the business and commercialising a product or service.
While there have yet to be any exits from the EIS funds, JFP has successfully exited six companies from the SEIS portfolio, generating a return of 5.1x across a mixture of cash and equity (before tax relief and performance fee). Past performance is not a guide to the future and these are still early-stage companies, which can and do fail. Indeed, the latest portfolio failure rate is 38% across 108 companies (April 2020).
- Invests in the ‘winners’ of JFP’s SEIS fund
- Generalist EIS with a preference for technology businesses
- Target return of £1.85x over a period of 5-7 years (not guaranteed)
- Aims to invest in a minimum of five investee companies
- Evergreen fund
- Minimum investment £10,000
Jenson Solutions Ltd (“JSL”) was established in 2001 by Paul Jenkinson, an experienced corporate financier. JSL provides strategic, financial, and operational solutions to small businesses. To complement this service, the company set up Jenson Funding Partners (“JFP”) in 2012, with the aim of raising and providing capital to early-stage businesses.
Since then, JFP has launched five SEIS and four EIS funds, deploying £16 million into over 100 businesses.
Both funds are managed by a core team of three, led by Jeffrey Faustin. Mr Faustin has a background in design consultancy and advising clients on complex commercial and infrastructure projects. He joined Jenson in 2013 as Investment Director and is now responsible for managing all aspects of the investment process. Whilst the investment team is small, it will have access to the resources of JSL where required.
JFP is a long-term investor focused on supporting companies from initial seed funding through to growth capital. The EIS fund will concentrate on making investments into companies from within its existing SEIS portfolio: only those that can demonstrate consistent and significant progress will be ‘graduated’ into the EIS fund. The fund may also consider follow-on investments and investments into businesses not currently backed by JFP.
JFP measures a company’s progress using four metrics: team strength, market validation, brand narrative and product differentiation. For a company to be successful, JFP believes it must be outstanding in all four areas .
For the EIS fund, JFP would expect a company to be ready to support an initial market offering and have gained some level of commercial traction. Ideally, the business should also have a relatively low cash burn model. This could potentially help the business continue to grow organically and achieve profitability without the need for immediate further funding rounds.
All investee companies will have access to JFP’s Investee Support Programme. The programme includes a ‘core package’ which covers vital business functions such as corporate governance, business development and accounting services. Taking up the core package is mandatory for the first year after investment and costs £500 a month per company. JFP will also offer more specific ancillary services (for an additional fee) such as assisting with grant applications, legal services, and funding preparation.
The fund targets a return of £1.85 for every £1 invested over a period of five to seven years, not guaranteed.
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.
While JFP is a generalist investor, it prefers technology-based businesses (currently around 60% of the portfolio ). In total, Jenson has completed over 108 investments since its first SEIS investment in 2012; of these, 16 were made in the EIS fund.
Investors will receive a minimum portfolio of five companies, with an expected holding period of 5-7 years. Jenson expects to make an average investment of £50,000 to £500,000 per 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 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. As at April 2020 Voneus was valued at £14 million, remember past performance is not a guide to the future.
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.
Twizoo (example of previous exit)
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.
To date, JFP has made 16 EIS investments; of these, one is no longer trading. While there have been no exits within the EIS portfolio so far, JFP has exited six companies across its two SEIS funds. Five of these were cash exits, with one exception being a mixture of cash and publicly traded stock. The current return is 5.1x with a mixture of cash and equity (before earn-outs , tax incentives and performance fee) . Please note, past performance is not a guide to the future.
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 £220.39, 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.
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.
|Full initial charge||—|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||—||Annual management charge||—|
|Performance fee||25%||Investee company charges|
|Annual fees||See below|
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.
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.
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.
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