MMC Ventures EIS Fund
MMC Ventures has invested exclusively in technology for over 20 years. The business has a proven track record of backing some of the UK’s fastest-growing private technology companies, including Gousto and Bloom & Wild, and has a history of delivering realised returns to investors, with £83 million returned to EIS investors since 2010.
The fund will seek to invest in a portfolio of 10–12 disruptive, high-growth, early-stage technology companies in areas such as e-commerce, fintech, and digital health.
MMC’s investment strategy has been largely unchanged since launch. MMC believes the companies most likely to transform today’s markets — or create new ones — will do it from the inside out: improving existing technology, rebuilding tech infrastructure and using data in fundamentally new ways. These are the businesses MMC aims to identify and help to scale up.
MMC continues to build on its track record. In 2020, three of its investee companies were listed in The Sunday Times Tech Track 100 list of the UK’s fastest-growing companies, and two achieved a partial exit: meal subscription company Gousto (up to 27x return) and flowers delivery service Bloom & Wild (up to 18x return) – remember past performance is not a guide to the future.
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- Evergreen EIS fund investing in transformative technology businesses
- A track record of backing some of the UK’s fastest-growing private companies, such as Gousto
- Well resourced investment team
- Investors should expect a diversified portfolio of 10-12 companies
- Mix of new and later-stage investments
- Deal flow and exit options potentially provided by MMC’s Greater London Fund (seed and pre-seed stage) and Scale-Up Fund (later stage)
- £25,000 minimum investment – you can apply online
MMC Ventures Ltd (“MMC Ventures” or “MMC”) was founded in 2000 by Bruce Macfarlane, its current managing partner, Alan Morgan, its current chairman, and Allan Cockell – hence the initials MMC. It started as a syndicate for high net worth individuals making early-stage technology investments, then launched the EIS fund in 2005.
MMC has always exclusively invested in high-growth technology-enabled businesses.
Today MMC has $500 million under management. In addition to the EIS Fund, it manages two institutional funds: the £52 million MMC Greater London Fund, launched in May 2019, and the £100 million MMC Scale-Up Fund, launched in November 2019.
The former is a seed and pre-seed fund backed by the Mayor of London. It invests at an earlier stage than the EIS Fund and provides potential deal flow. In the words of Bruce Macfarlane, “if you’re not in early, it can be hard to get in at a later stage”.
The MMC Scale-Up Fund sits at the other end. It looks to invest in companies once they have grown beyond the limits of EIS investment. MMC believes this will appeal to existing MMC-backed entrepreneurs looking for later-stage funding as well as EIS investors seeking another potential route to exit.
In our view, the MMC Ventures’ EIS is strengthened by these additional mandates.
MMC invests across a variety of subsectors within technology, including fintech, digital media, digital healthcare, consumer internet (including e-commerce), as well as travel and transport.
MMC operates a two-stage Investment Committee process when assessing new investments. The first is before terms are offered to a potential investee company to shape the due diligence focus. The second is to review the due diligence findings before investments complete.
As well as providing capital, MMC draws on its own experience and network to assist investee companies in areas including international expansion, senior hiring, access to potential clients, corporate governance, fundraising, bank finance and exit. Its research team works closely with investee company founders to help businesses grow.
MMC targets an initial investment of £1–5 million in each investee company. MMC can support companies as they grow through further EIS funding of up to £12 million per company, or up to £20 million if it is a ‘Knowledge Intensive Company’. Beyond that, the Scale-Up fund could potentially provide support.
The investment team is a mix of 12 investment professionals and includes two of the three founding partners. The team is supported by eight advisors. The advisors include experienced venture partners and previous members of the investment team, a number of which have since taken up roles within MMC investee companies after working closely with them.
The investment team has a range of backgrounds, from experienced venture capital investors to younger talent from consultancies, investment banks, law firms and asset managers.
The investment team seeks to develop a deep understanding of the technologies employed within its areas of focus, with the team publishing research on areas such as quantum computing, blockchain, and artificial intelligence. In MMC’s view, this is a key differentiator: understanding the technology and business model helps MMC make sound investment decisions and identify the highest-potential opportunities. This understanding is further enhanced by working closely with investee companies to gain first-hand experience.
The MMC team commits to investing in every EIS fund deal and has invested over $17 million to date. This helps align the management team’s interests with those of investors.
The fund aims to return 2–3x the invested amount over a 3 to 8-year investment period. This is not guaranteed. The timescale is, however, likely to be longer than three years.
The fund seeks to exit investments after a period of five to eight years. Capital will be repaid to investors as investee company shares are sold.
MMC has in the past exited via AIM IPOs and well as sales to strategic acquirers, financial buyers and secondary funds.
For example, MMC’s partial exits in 2020 (up to 27x return for Gousto, and up to 18x return for Bloom & Wild) were achieved through share sales to third-party investors. Past performance is not a guide to the future and exit options are not guaranteed.
As part of its remit, the Scale-Up Fund can offer to buy equity stakes from earlier MMC investors. MMC has exited two EIS companies in this way to date, returning up to 5.5x and 6x respectively (before EIS tax reliefs) to investors who wished to sell – note investors were given the choice whether to hold or sell, which helped avoid a conflict of interest. Please note, there are no guarantees the Scale-Up Fund will be used to offer an exit route to new investments and past performance is not a guide to the future.
Investors into the MMC EIS Fund can expect exposure to 10 investee companies (not guaranteed) comprising new deals and more mature investments. MMC aims to deploy funds over a 12 to 18-month period.
The companies outlined below are historic investments made by the MMC EIS fund. Note these are previous EIS investee companies and may not form part of a new investor’s portfolio. They are outlined to give examples of the types of companies an investor might expect.
Founded in 2012, Snowplow has developed a real-time event data technology that enables businesses to track, contextualise, validate, and model customer behaviour. The business is empowering companies to make better use of their customer data. Giving businesses better control of their data allows them to enhance a wide range of functions, such as improving the customer journey, maximising marketing budget, and powering product development.
MMC Ventures first invested into the business in 2019 as the company’s first venture capital investor, leading a £4 million investment round at a £11.8 million pre-money valuation. The funding was to be used to continue to fund Snowplow’s expansion into the US and Europe.
In January 2021, the business raised a further $10 million in a funding round led by global growth technology investor Atlantic Bridge, alongside additional investment from MMC Ventures. The funding round took place at an uplift to MMC’s prior investment, although the details of the deal remain private. Today, more than 600,000 websites use Snowplow as their behavioural data management platform.
Gousto has created food delivery technology that offers customers a weekly box of healthy, responsibly sourced ingredients, providing everything needed in the right quantities for couples or families to cook delicious meals. The business uses automation and machine learning to route boxes in its warehouse and has developed an algorithm to predict what each customer will choose to cook for dinner, helping to reduce food waste.
This approach has enabled the business to grow rapidly and Gousto is now delivering more than 5 million meals to households every month. Demand increased significantly during the first six months of 2020 with the company surpassing the £83 million of sales reported for the whole of 2019. According to The Sunday Times Tech Track 100, Gousto is one of the UK’s fastest growing private technology companies.
MMC first invested in 2013 and has participated in multiple rounds of funding since, the most recent being over £30 million of institutional capital in April 2020.
In late 2020, Gousto joined the ranks of the UK’s increasing number of unicorns, private companies achieving a valuation in excess of $1 billion, by raising a further £25 million from exiting investors. Gousto intends to use the proceeds to triple capacity and create a further 1,000 jobs.
In 2020 MMC’s investors were given the opportunity to partially exit their investment, with investors achieving realised returns of up to 27x their original investment. Please note, this is an exceptional return and past performance is not a guide to the future.
Bloom & Wild (example of previous exit)
Founded in 2013, Bloom & Wild pioneered ‘letterbox flowers’ – fresh flowers packaged to be delivered unblemished through your letterbox.
Underpinning the business’ lovely floral gifting proposition are sophisticated predictive analytics and technology to deliver a fresher, less-travelled bouquet.
Operating across the UK, Ireland, France, Germany and Austria, in 2020 Bloom & Wild delivered over 4 million orders – more it had in all previous years combined. Bloom & Wild is now the fastest-growing flower business – and one of the fastest-growing tech companies in Europe.
MMC Ventures first invested in July 2015 (at a valuation of less than £10 million) and supported the business through two further funding rounds in 2017 and 2018. In 2020, the business announced a £75 million institutional funding round which valued the business at over £350 million. MMC investors were given the opportunity to partially exit their investment, achieving realised returns of up to 18x their original investment. Past performance is not a guide to the future.
Mastered (example of previous failure)
As with any EIS company, these are high-risk investments and not all will work out as planned. Mastered is an example of a failure. The business was created to serve a new generation of emerging talent from the creative industries – film, music, etc. The business delivered online and in-person tuition with feedback, coaching and content from prominent industry figures including Val Garland and Sam McKnight who have worked with celebrities including Princess Diana, Kate Moss and Lady Gaga.
The MMC EIS Fund first invested in early 2016. The company grew well and MMC invested again in 2017. However, over the course of 2017 and 2018, the business took longer than hoped to fill enrolment targets and sign corporate sponsorship deals and needed further investment.
Ultimately, conversations with potential new investors did not result in an offer of funding or acquisition, and MMC decided not to commit further money. The board put the company into administration ensuring any customers already enrolled could finish their courses.
MMC Ventures has a strong track record of delivering returns to investors. Since its MMC Ventures has a strong track record of delivering returns to investors. Since its inception, the MMC EIS fund has invested in 60 companies and achieved 30 exits. Fourteen exits were profitable, two were unprofitable, and 14 were written off. In total, MMC has returned £83 million to EIS investors since 2010 (December 2020).
The chart below shows the average performance of the total subscribed into the funds each tax year, based on valuations as at 31 December 2020, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.
Source: MMC Ventures, as at 31 December 2020. Performance figures are supplied by MMC Ventures and are net of all fees, based on MMC Ventures’ valuation methodology. Past performance is no guide to future performance. In the above figures, initial tax relief of up to 30% – 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 and 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.
Exits could take considerably longer than three years.
A summary of the main charges and savings is shown below. Some of these will be payable by the investor, 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||4%|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||4%||Annual management charge||2.5%|
|Performance fee||20%||Investee company charges|
|Initial charge||—||Annual management charge||—|
More detail on the charges
Timing of the offer
MMC anticipates taking 12 to 18 months to fully deploy investor capital. As is typical with EIS and SEIS investments, it may not be possible to have all funds deployed before a deadline such as the end of the tax year.
There are no deadlines with this EIS offer.
2020 was a good year for the MMC portfolio. Three of its investee companies (Elder, Signal AI & Gousto) were featured within the Tech Track 100 list of the UK’s fastest-growing companies, and Gousto joined the UK’s growing ranks of technology unicorns, securing a substantial partial exit in the process (return of up to 27x). Portfolio company Bloom & Wild, the flower delivery business, also secured a sizeable partial exit for EIS investors: note past performance is not a guide to the future.
MMC Ventures is in our view a credible and experienced manager that has applied the same investment strategy for the last 20 years, building a proven track record of both backing fast-growing technology start-ups and delivering realised returns to investors.
MMC’s two institutional funds, The Greater London Fund and the MMC Scale Up Fund could further enhance the EIS offer by potentially providing increased deal flow and exit opportunities respectively (not guaranteed).
For investors looking to invest in technology via an EIS fund this year, this could be an attractive consideration. The interests of the team are aligned with those of investors. The team invests personally in every EIS deal and has committed over $17 million to date.
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