SidebySide EIS Venture Fund
The SidebySide EIS Venture fund seeks to invest in high-growth EIS-qualifying technology companies that already have a developed customer base and revenues of £1–£10 million.
The fund is managed by The SidebySide Partnership, which was founded by successful entrepreneur John Bailye. He’s best known for founding Dendrite International – a software provider to the pharmaceutical industry. Started in 1986, Dendrite was public for almost 15 years before being acquired in 2007 for $751 million.
The fund will look to use John Bailye’s previous experience to help support its investee companies.
To ensure each company receives the attention it deserves, unusually, SidebySide has decided to limit the number of investee companies to just 10 across different iterations of the fund.
SidebySide Partnership has invested in six companies since launching its first EIS fund in 2019.
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- Managed by an experienced entrepreneur with a $751 million exit
- Focused on mentoring only a small number of companies at any one time (currently six)
- Target return 3x (net of fees and excluding tax relief – returns not guaranteed)
- Expected exit timeline of eight years (not guaranteed)
- Charging structure aligned with investors' interests: no initial or annual management fees and performance fee set against a high hurdle
- Minimum investment £10,000 — you can apply online
The SidebySide Partnership was founded by John Bailye in 2016, originally as a family office to manage his personal investments. In 2019, it launched its first EIS fund.
John has significant experience as an entrepreneur, investor and mentor. He first found success as the founder and CEO of Dendrite International Inc. The business started in 1986 in Australia to pioneer the development of software applications for pharmaceutical sales force management. After relocating to New Jersey, it listed on NASDAQ before being acquired in 2007 in a deal worth $751 million. At the time of the acquisition, Dendrite had grown to 3,000 employees and had clients in more than 52 countries.
In addition to Dendrite International, John has helped turn EKR Therapeutics, a specialist pharmaceutical business supplying hospitals with critical care products, into a business generating $125 million in sales. He also mentored the management team of Systech International: after he took a stake in the business, revenues grew from $14 million to $50 million and the business was subsequently sold for $165 million. Please note: past successes are not a guide to the future.
John is supported by a close-knit team of three full-time investment professionals. Additional support comes from portfolio company mentor Sheli Gupta, a successful serial software entrepreneur in the US, as well as oversight from two experienced independent members of the investment committee.
Sapphire Capital Partners LLP is the Investment Fund Manager for the SidebySide EIS Venture Fund.
Watch our latest video interview with John Bailye of SidebySide, recorded October 2020:
The fund seeks to invest in high-growth and relatively established young technology companies with revenues of £1-£10 million. Each investee companies should be driven by an ambitious and motivated management team.
SidebySide sources deal flow from John Bailye’s professional network and personal contacts, as well as through a number of regional funds, regional angel networks and corporate finance houses. SidebySide bills itself as a hands-on and supportive investor. It believes this, alongside John Bailye’s experience, should prove appealing to entrepreneurs raising capital.
In addition to the revenue target, SidebySide looks for several attributes, including:
- At least three years of meaningful revenue growth
- Strong customer endorsement
- Founders with a significant personal investment into the company paying themselves modest salaries
Once invested, SidebySide looks to be actively and regularly involved with day-to-day operations and strategy of every company it invests in to add value, although it does not wish to run them.
Currently, the SidebySide Partnership has six investee companies within its portfolio and aims to spend at least two days a month with each.
The SidebySide EIS Venture Fund targets a return of three times the amount invested after eight years, excluding any EIS tax reliefs, not guaranteed.
SidebySide’s preference is for exits to be planned well in advance, ideally via a trade sale. The expected holding period for investments will be between three years and up to eight years, not guaranteed. Exits can happen sooner, or take significantly longer than planned.
The SidebySide EIS Venture Fund aims to invest in three to five investee companies per deployment.
The companies outlined below are historic investments made by the fund in its previous iterations and give a flavour of the types of companies a new investor might expect. EIS funds tend to be managed on a discretionary basis so each individual portfolio is likely to be different.
Laundryheap provides an on-demand laundry and dry-cleaning service, offering collection and delivery in just 24 hours. Laundryheap’s serves both individuals and businesses (e.g. hotels). Laundryheap also provides a linens rental service (bedding, towels and toiletry packages) to the short-let and Airbnb market. Packages are delivered to the rental property ahead of any new guests arriving and the driver will also collect the old set of linen and return this to be laundered at Laundryheap’s partner facilities.
The business is based in London and is expanding across other major cities including Manchester, Birmingham, Coventry, Amsterdam, Dublin, and Dubai. Today, Laundry operates in 11 countries .
SidebySide first invested in the business in April 2020 and has since participated in three funding rounds, including a $3.5 million funding round in February 2021 alongside Sova VC. The SidebySide team sees an opportunity on the B2B side of the business. The team was impressed with the quality of the entrepreneur and the revenue growth the business has generated since it was founded. Please note, past performance is not a guide to the future.
Keen golfers may be familiar with Shot Scope’s range of GPS watches and Rangefinder. In addition to selling these products, the business uses the combination of patented wearable technology, patented processes, cloud-based algorithms and proprietary database IP to automatically collect a unique set of advanced statistical data that allows users to monitor and improve their performance, currently within the golf market.
Shotscope recently launched its new V3 and G3 watches, selling over £1 million worth of units in the month of July 2020 alone. The company has grown revenue by 154% in 2020 and appears well placed to benefit as golfers return to courses following lockdown, although this is not guaranteed and past performance is not a guide to the future.
SidebySide believes the company is uniquely placed to meet the needs of a growing market by offering a single device that collects statistical data and performance information. There is an opportunity in the data not only for players but also for golf club manufacturers in identifying different performance levels of real players using their clubs in an aggregated form.
SidebySide first invested in the business in November 2019 and has to date participated in three rounds of funding.
SidebySide Partnership has a limited track record and therefore has not experienced any exits or failures to date. However, as with all EIS funds, investors should be prepared for some failures in the portfolio.
The SidebySide EIS Venture Fund launched in 2019 and therefore has a limited performance track record.
The chart below shows the average performance of the total subscribed into the funds each tax year, based on valuations as at 14 April 2021, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.
Source: SidebySide Partnership. 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.
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.
The Fund is dependent on the skill and expertise of John Bailye and the chosen experts appointed to provide Investee Companies with specific skills and guidance to act as the investment adviser and provide Mentoring Services to the Investee Companies. Any loss of these services may have an adverse impact upon the prospects of the Investee Companies and therefore negatively impact the Investments made by Investors.
Exit is likely to take longer than the three year minimum holding period.
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.
|Full initial charge||0%|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||0%||Annual management charge||0%|
|Performance fee||30%||Investee company charges|
More detail on the charges
Timing of the offer
The SidebySide EIS Venture Fund aims to deploy capital within the financial year in which it was invested, but in no case longer than 12 months after receipt of investments, not guaranteed.
This is a relatively new EIS fund which hasn’t yet had the time to build a performance track record.
There are number of attributes that may appeal to investors. Firstly, the experience of John Bailye is considerable. The opportunity to invest alongside him may be attractive, as well as also having appeal to entrepreneurs seeking funding and a supportive investor. Few venture capital managers can say they have founded and built a business which floated on NASDAQ and achieved a $751 million exit. This may attract deal flow to the fund.
Secondly, by limiting the number of companies SidebySide can invest in, the team’s focus is concentrated, whilst increasing diversification risk, it may enhance the value it can add to its investments. Finally, the charging structure is tax efficient and weighted in investors’ favour, in our view. Investors pay no initial or management fees and the performance fee set against a high hurdle rate.
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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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