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. 

The fund is sector agnostic, with a focus on tech-enabled businesses. It seeks to identify early-stage high-growth opportunities. JFP’s Jenson SEIS Fund is one of the longest-running SEIS Funds – it has made over 115 investments and is the main source of deal flow for the EIS Fund. 

To date, the Jenson EIS Fund has invested a total of £4 million into 25 companies (24 from JFP’s existing portfolio). It achieved its first exit in 2021, 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; these are early-stage companies, which can and do fail. The portfolio failure rate is approximately 16% across 25 companies (December 2021). 

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.

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Highlights

  • EIS with focus on tech-enabled businesses
  • Planned deployment within tax year of investment (carry-back available)
  • First exit achieved in 2021
  • Target return of 1.85x before tax relief over a period of 5-7 years – not guaranteed 
  • Aims to invest in 5-10 companies, sourced mainly from JFP's SEIS portfolio
  • Evergreen fund
  • Minimum investment £10,000 

The manager

Jenson Funding Partners (“JFP”) was launched in 2012 to raise capital for early-stage businesses following the introduction of the Seed Enterprise Investment Scheme. 

Since then, JFP has deployed £19  million into over 115  businesses across its SEIS and EIS funds. 

The funds are managed by a core team of nine, led by Sarah Barber and Jeffrey Faustin.  Sarah is a Chartered Accountant by profession and was part of the team responsible for creating the first Jenson SEIS Fund in 2012, she is now the CEO, Partner and Board Member. Jeffrey has an engineering background and made the transition to venture capital after completing an MBA in 2012, joining JFP shortly after. He is now Chief Investment Officer and Partner, responsible for managing all aspects of the fund.

Watch a video interview with CIO Jeffrey Faustin:

 

Investment strategy

JFP is a long-term investor, supporting companies from initial seed funding through to growth capital. 

The EIS fund concentrates on companies from the existing SEIS and EIS portfolios. 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 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.

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 five and 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. To date, JFP has invested £3.9 million into 25 portfolio companies through the EIS fund since 2015. 

Investors will receive a minimum portfolio of 5-10 companies, with an expected holding period of 5-7 years. JFP expects to invest £100,000 to £2.0 million 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.

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 of more than 4 billion people. 

With 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 has since provided EIS funding in 2019 and 2021 with the company’s valuation rising 28% between rounds. Past performance is not a guide to the future.

The Seam – JensonThe Seam – recent investment 

Online tailoring platform Seam was founded by Layla Sargent in 2019 after a move to London meant she could no longer rely on her grandmother for alterations and repairs to her wardrobe.

Seam matches individual tailors and seamstresses with people wanting to repair or remake clothes, helping reduce waste in the fast-fashion industry. 

The company has a network of over 700 makers in the Greater London area, with thousands of customers. Seam estimates that extending the life of clothes by just nine months can reduce carbon, water and waste footprints by as much as 30%.

In November 2021, Jenson led a £250,000 pre-seed round for company, which valued the whole business at £1.35 million.

Voneus – JensonVoneus – example of previous exit

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

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 homes. Current speeds are between 30-50Mbps, which should be more than enough to stream TV or work remotely.

Voneus currently supplies thousands of homes across 50 rural communities. In August 2019, it 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 provided an additional £420,000 in EIS funding. In 2021, Jenson exited Voneus following a partnership between Voneus and Macquarie Capital. The exit represented an average 2.5x return for the EIS fund across all investments.

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 invested in 25 EIS-qualifying companies, four of which have failed. 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 1 December 2021, 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: JFP, as at 1 December 2021. 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. 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 

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 nine-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.

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
1.85x
Funds raised / sought
-
Minimum investment
£10,000
Deadline
Discretionary
Last updated: 22 March 2022

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