A4 RLC Ventures Global EIS Tech Fund

The A4 RLC Ventures Global EIS Tech Fund aims to invest in early-stage technology companies it believes have the potential to become global businesses.

The fund looks for companies across a range of growth stages and within three key areas: work, play, and finance. 

Investee companies should preferably be headquartered in the UK and have a proportion of their operations based overseas. RLC Ventures believes this could give investee companies a significant cost advantage over rivals as well as access to a wider pool of talent and consumers.

RLC Ventures, the investment manager, started investing in 2016 and has enjoyed some success. An early exit of Betting Metrics saw early investors from the first fund achieve realised returns of up to 38x on their initial investment, whilst investors from the second fund received 3.8x – note this is an exceptional exit on a small investment and past performance is not a guide to the future.

While RLC Ventures is still a relative newcomer to EIS/SEIS, it is starting to gain industry recognition and investor support.

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

  • Focus on technology companies with an international presence
  • Management team is required to invest personally
  • Targeting companies within the following sectors: work, play, and finance
  • Target return of £2.60 per £1 invested, not guaranteed
  • Minimum investment £50,000 - you can apply online

The manager

RLC Ventures, the investment manager, is led by Reece Chowdhry, a former management consultant. Mr Chowdhry has been investing in startups for over 10 years and has a personal portfolio of 50 companies.

He is assisted by a core investment team of eight, including his father, Jeff Chowdhry, who was appointed to RLC Ventures as Chairman to add the institutional rigour and oversight needed to scale the business. Mr Chowdhry (senior) has considerable industry knowledge having held senior positions at BMO Global Asset Management (previously F&C). As Head of Emerging Markets at BMO he was responsible for managing over £5 billion in the emerging markets sector.

Alongside the investment team, RLC Ventures is supported by an independent advisory board of 11. Each adviser typically has a background in entrepreneurship or within a certain industry.

The management team aims to invest 2.5% of total funds raised into every company, to align interests with those of investors. So far, the team has committed over £1.2 million.

Investment strategy

RLC Ventures has launched five previous EIS and SEIS funds of which the most recent two have yet to be fully deployed. The three fully deployed funds have invested £2.73 million across 32 companies.

The fund will follow a similar investment strategy as previous iterations. It aims to build global businesses from the outset. RLC Ventures will ideally look for companies headquartered in the UK with an international team presence. Often one of the most expensive aspects for a young business is technology development. By establishing this function in growing markets, companies may be able to reduce costs significantly – providing they can maintain their operations across long distances and potentially different time zones.

RLC Ventures will make exceptions to this strategy if a business can demonstrate comparable levels of capital efficiency and scalability.

RLC anticipates most investment opportunities will be sourced through angel networks, introducers and RLC Ventures’ scout network. In a year, the team expects to see around 2,500 deals in total with an average of 50 deals a week getting through to the screening process. For those that make the cut, additional due diligence will take place with external consultants to provide an investment paper for the independent advisory committee. The committee must reach a majority decision before an investment can be accepted.

Post-investment, RLC Ventures looks to support founders on growth strategy, fundraising, recruitment and financial management. RLC Ventures maintains a strong relationship with its founders which provides new companies with an existing infrastructure to support them.

Target return

The manager is targeting a gross return of £2.60  per £1 invested, not guaranteed. 

Exit strategy

RLC Ventures will consider a company’s exit route before deciding to invest. It is the intention of the fund to realised exits within a holding period of 5–7 years; however, exit routes and timeframes cannot be guaranteed.

Portfolio

RLC Ventures aims to offer a portfolio of companies split between three growth stages: prototype, early traction, and revenue growth. RLC expects the majority of the portfolio will fall into the revenue growth category (70%) with the remainder split between early traction (20%) and prototype opportunities (10%).

Investee companies should fit into at least one of the following categories: work, play and finance. RLC aims to invest between £50,000 to £500,000 and seeks stakes of between 1-20% depending on the company’s stage.

RLC Ventures aims to provide investors with a portfolio of 10 to 15+ companies, however, it also offers an accelerated deployment option which targets a minimum of five companies. The maximum allocation per company is 15%.

The companies outlined below are historic investments made by the RLC Ventures EIS funds. 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.

Organise – A4 RLC Ventures Global EIS Tech FundOrganise

Organise is a platform which helps workers organise and campaign for better rights.

The business was founded by Nat Whalley and Bex Hay in 2017. Whalley has a background in political campaigning and Hay was the former technology director at 38 Degrees, one of the UK’s largest campaigning organizations. Hay also cofounded Amazon Anonymous – an online campaign that contributed towards Amazon being forced to pay corporate tax in the UK and pay staff a living wage. 

As a platform, Organise gives users the tools and support needed to launch and manage campaigns, as well as coordinating everything from online surveys to submitting petitions to the Government. Furthermore, using its existing network, Organise can connect employees of the same organisation to raise awareness of internal issues and build momentum. 

The platform now has over 1.2 million users and has already supported a number of prominent cases, including highlighting staff harassment at Ted Baker – which eventually led to the resignation of CEO Ray Kelvin. 

RLC Ventures participated in the company’s £570k seed round in 2020 alongside coinvestors such as Ada Ventures, Form Ventures, and Ascension Ventures.

Dorm – Arrive SEIS Tech Fund IIIDorm

Whilst working together at VC-backed Sweatcoin, Ranbir Arora (Dorm’s CEO) and Taras Polischuk (COO) noticed a number of their friends weren’t enjoying their jobs or feeling fulfilled by their careers. 

In early 2020, they set out to change this. Launched in December 2020, the Dorm platform uses podcasts and content from the world’s leading entrepreneurs, YouTubers and venture capitalists to guide students on how to launch their own careers in these fields, featuring guests such as the founders of Snapchat, top music labels and leading YouTube channels. The platform now has more than 1,000 weekly active users .

RLC Ventures was introduced to the business through an existing portfolio founder and invested because of the strength of the founding team and the size of the potential market. RLC Ventures was the lead investor in a £750k funding round, alongside Silicon Valley’s Social Starts, Plug n Play, The Fund and Playfair Capital.

Betting Metrics – Arrive SEIS Tech Fund IIIBettingMetrics (example of previous exit)

To date, RLC Ventures has achieved one exit. BettingMetrics is a sports betting software that combines all betting activities under one roof, often described as the Bloomberg of sports betting. BettingMetrics provides entertaining and educational content, fast and accurate odds comparison, bet placement, automated bet tracker, advanced analytical, bankroll tools and a marketplace where punters can buy and sell tips, all accompanied with customer support.

RLC was the sole external investor into the business across multiple funding rounds through RLC’s previous two funds. The funding was used to develop the product and prove the business model. The company was acquired by GameLounge via a trade sale in 2020. Investors saw a strong return on their original small investment: 38x  after two years for Fund 1 and 3.8x after seven months for Fund 2. RLC’s aggregate £155,000 investment generated proceeds of £1.45 million. Since the exit was achieved within the three-year minimum holding period, investors were unable to claim tax relief. Please note, past performance is not a guide to the future. 

Example of previous failures

There have been no failures to date, but the funds have only been active for a short period. Realistically, failures are likely and Mr Chowdhry anticipates that at this stage of investing a failure rate of 50% could be expected. Please note, past performance is not a guide to future. 

Performance

The annual performance track record of RLC Ventures across its first three EIS/SEIS funds in the relevant tax year, per £100 invested, since launch is shown below.  The latter two fund have not yet been fully deployed,

Source: RLC Ventures, as at 6 July 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 could also apply - remember tax rules can change and tax benefits depend on circumstances). No investments were made in the 2018/19 tax year.

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, or even be prepared for all companies to fail.

Charges

A summary of the main charges and savings 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 0%*
Wealth Club initial saving
Net initial charge through Wealth Club 0%
Annual management charge 1.9%
Administration charge
Performance fee 20%
Investee company charges
Initial charge
Annual charges
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

RLCV Ventures targets a deployment period of 12-18 months from close for standard deployment. For investors who select accelerated deployment, the fund will aim to deploy funds within the current tax year – not guaranteed. 

The fund is expected to close on 30  September 2021.

Our view

In our view, the investment strategy adopted by A4 RLC Ventures Global EIS Tech Fund is an interesting one. It has a focus on software within three key categories: play, work, and finance. 

The question now is whether RLC Ventures can continue to execute its investment strategy as the business grows. Early backers of RLC Ventures were well rewarded and Reece Chowdhry is committed to building this promising early track record, although past performance is not a guide to the future. 

The investment team benefits from the appointment of Jeff Chowdhry as Chairman. Mr Chowdhry is an experienced operator and is well aligned to the success of his son’s business. This father and son team have £1.2 million personally invested in RLC Ventures portfolio companies to date, with a commitment to invest directly in each investee company.

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
£2.60
Funds raised / sought
-
Minimum investment
£50,000
Deadline
30 Sep 2021
Last updated: 6 September 2021

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