How we assess single company EIS

All the single company EIS deals on our website have been carefully reviewed either by Wealth Club or by reputable and established counterparties, to help you make your own decision whether to invest. Wealth Club has a team of experienced corporate finance executives: qualified accountants with years of experience in highly regarded accountancy practices and in-house, within private equity-backed businesses. We do not verify or audit Company information but produce our reviews to help experienced investors make their own decision whether to invest.

Explainer: Private company investing

 

Wealth Club single company deals

These private deals are often available exclusively to our members. 

They are either originated by us or introduced to us from our qualified network, which includes many of the top accountancy firms and corporate finance boutiques. 

We see a large volume of deals, up to 25 per month. From these, after a preliminary review, we create a shortlist of those that look potentially credible in our view. Only a handful progress into our more detailed review process. For Wealth Club-led deals, we negotiate valuation and key commercial terms. We carry out a review, covering many strands, such as management, commercial and financial and distil our findings into an easy-to-read research report to present the deal to investors. We do not verify or audit company information, but we produce our reviews to help experienced investors make their own decision whether to invest.

We reserve the right to step aside from a deal at any time if our review uncovers issues that have a material impact on our view of the management and/or the company’s growth prospects or value.

We sometimes personally invest in deals, but not always. However, if we wouldn’t be comfortable investing ourselves, or if we would not be comfortable for our friends or family to, we pull out of the deal – this has happened on occasion. As a result, we introduce to our investors only a minority of the deals we see. The service is not personal advice and you should always make your own informed investment decision after carefully reading the company’s Information Memorandum.

Co-investment and third-party deals

We regularly introduce our investors to co-investment opportunities with a cornerstone investor, or deals where a corporate finance boutique is leading the commercial negotiations and funding round and has typically carried out extensive due diligence. Co-investment opportunities could provide an attractive way for experienced Wealth Club investors to participate in deals on the same terms as large funds and corporations.

For this kind of deal, we need to satisfy ourselves both the co-investment partner and the underlying company are credible and robust. 

To date, we have co-invested in deals alongside global corporations including Bayer Pharmaceutical, Hinduja Group, Mitsubishi and Saint-Gobain as well as financial institutions such as WestBridge Fund Managers, Amadeus Capital Partners, Development Bank of Wales and Gresham House along with a variety of family offices and ultra-high net worth investors. We have also worked with highly regarded corporate finance boutiques, such as West Hill Corporate Finance. 

What do we look for in our deals?

We don’t focus on any particular sector. We are selective and aim to only introduce high-quality, high-potential companies to our investors, although as with all early-stage companies, these are high-risk investments. The companies for which we raise money must all have some important characteristics. 

1. The management 

We look for experienced and ambitious people, preferably who have previously achieved success in a relevant venture and have invested significant amounts of their money into the business. They must be fully committed, have in-depth knowledge of their sector and market and a clearly articulated business plan. Supporting the management team, we look for an accomplished professional Board demonstrating strong corporate governance and accountability. 

2. The business 

We look for businesses offering a credible solution to a real problem that we believe capable of significant scale and rapid growth. We prefer revenue-generating, B2B, capital-efficient companies, with a differentiated market approach and defensible market position. 

3. The market 

The market needs to be large enough and growing – the business must have a well-defined, proven method to access it and clear potential exit options

4. The financials 

We look for businesses with high-quality earnings, potential for good margins and cash generation and a clear path to profitability and ultimately, an exit (not guaranteed).

5. Investment appeal 

We look for businesses that can be built in manageable chunks, capital-efficient and don’t need to dominate the world to be successful. The valuation must be reasonable, in our view, and the target returns should reflect the level of risk to which investors are exposed. 

What information do we give investors?

The findings of our review are distilled in the research reports we usually make available alongside our deal overview, the company’s own Information Memorandum and key governing documents. 

Our aim is to give our experienced investors all the information they need to weigh up the risks and decide whether or not to participate. Our service is not advice or a personal recommendation to invest.

Track record

Since July 2016, we have raised a total of £87.4 million for 50 EIS-qualifying single companies (data to 31 July 2021). 

Of these, 14 companies (28%) have had follow-on rounds at a higher value. Five companies have experienced an unrealised uplift greater than two times, and nine companies have experienced an unrealised uplift of between one to two times.

32 companies (64%) are yet to launch a follow-on round or have undertaken a follow-on round at the same value, while 4 companies (8%) have undertaken a down round.

Wealth Club single company investments are not held in a fund. However, for comparability, below we show performance in a similar format as for EIS funds. The chart below provides average performance, assuming investment into each of the single company EIS investments that have fundraised in a given tax year, on an average £100 invested basis.

The majority of investments made in 2016/17 and 2017/18 tax years were into asset-backed EIS investments, which are no longer available. Investments from 2018/19 onward are growth-capital investments. Please note, past performance is not a guide to the future. 

The blended unrealised value of all investment raised, based on share prices in the latest funding rounds, stood at £105 million.

This information is prepared to 31 July 2021.

Source: Wealth Club, based on investee company information. Data as at 31 July 2021, for all single company EIS investments made through Wealth Club since 2016, not yet taking performance fees into account. Investors pay no direct fees. Figures shown are averaged, on a £100 invested basis. Valuations reflect the share price in the latest funding round, or the original share price if there has been no subsequent funding round. These are private company shares and there is no readily accessible market for them. Past performance is not a guide to the future. All figures are unrealised returns. There have been no realisations to date. Figures do not include tax relief.

Case studies

Below are examples of past deals that have proven popular with investors. 

Inotec EIS-minInotec AMD EIS (co-investment with Amadeus Capital Partners and other funds, Jonathan Milner)

Inotec has developed patented wound care technology offering superior healing rates for chronic wounds. Its NATROX® oxygen therapy technology heals or improves 88% of wounds previously untreatable with standard care. NATROX has been commercialised in the US since 2018 and is used by the US Department of Veterans Affairs – the largest integrated healthcare provider in the US, similar in size to the NHS.

The Company has received significant backing from sector specialists, including Amadeus Capital Partners and Abcam founder Jonathan Milner. In April 2021 Wealth Club members invested £4.7 million as part of a Series C round, extended due to investor demand.

Wealth Club was recommended to us by our cornerstone investor Amadeus Capital Partners. The deal team at Wealth Club showed great expertise in understanding our business and the investment opportunity. They were always available and on top of their process, and they worked seamlessly alongside all other parties involved in the transaction ensuring a successful fundraise. They were a fantastic partner to have onboard our Series C round and we highly recommend them.

Craig Kennedy, CEO, Inotec AMD

Acamar Films – Single Company EISAcamar Films EIS 

Acamar Films is the independent production company behind Bing, the top-rated BBC CBeebies children’s TV series. The first episode aired on CBeebies in June 2014 and soon became a hit, now broadcast in 130 territories. Today Bing is the most popular pre-school show on BBC iPlayer, its YouTube channel has over 3 billion lifetime views as at January 2021. 

Wealth Club members have invested £12 million across six completed rounds (EIS equity and debt). Investors in the first offer (June 2018) invested at a £30 million valuation. The most recent round (February 2021) was at a £115 million valuation. Please note, past performance is not a guide to the future and returns are not guaranteed: capital is at risk. 

We chose Wealth Club because we were impressed by the people we met and liked the fact it was a young, dynamic company, but had strong industry credentials. They have managed to build a very large network of investors in a relatively short time. They invested time and effort in really understanding our business -- which we view as crucial to telling our story – and worked closely with us to deliver a structure that creates value and aligns our interests with our investors. Wealth Club really seemed to care about the success of our company and the creation of value for their investors. They have been an excellent partner for us.

Mikael Shields, Founder and CEO, Acamar Films

Azoomee EISAzoomee EIS (Wealth Club exclusive deal)

Azoomee was founded in 2014 by husband-and-wife team Douglas and Estelle Lloyd, concerned with the content their daughters were able to access online. The Company now offers over 300 age-appropriate games and 1,500 hours of safe video content, 

Wealth Club members have invested £6.6 million across four completed EIS rounds, including £1.9 million since the first COVID-19 lockdown in March 2020. Since Wealth Club investors initial investment in March 2019, Azoomee has acquired a competitor (Da Vinci Media GmBH) and has grown its subscriber base to over 50 million across 190 countries. 

Wealth Club sets the gold standard in fundraising for UK-based private companies. In my experience both as an entrepreneur and a former banker, no fundraising group comes close in the UK in terms of professionalism, work ethic, process and a determination to deliver on a fundraising. The entire team is outstanding and always contactable. To date, we have raised over £6.3m through Wealth Club to deliver on our growth strategy. They remain our “go-to“ partner for future EIS fundraisings.

Douglas and Estelle Lloyd, Co-Founders, Tinizine Ltd (trading as Azoomee)

Pavegen Systems EISPavegen Systems EIS (co-investment with institutional investors, including Hinduja Group)

Pavegen has created patented floor tiles that turn footsteps into clean energy and data: every time a person steps on a Pavegen kinetic tech floor tile, clean electricity is created. 

To date, Pavegen has delivered projects for city developers, government bodies and blue-chip corporates in 36 countries, installing over 200 systems. These include installations in Yosemite National Park in California, Abu Dhabi airport and Chelsea Flower Show in London as well as the world’s first indoor exercise track that produces energy in Hong Kong. The aim is to make Pavegen’s patented technology a core component of smart cities infrastructure – a market worth an estimated $381 billion and forecast to grow at 40% per annum.

Wealth Club investors have invested £2.7 million in Pavegen's latest funding round, which closed in March 2021, co-investing at the same share price as conglomerate Hinduja Group and Tamar Capital and Wadi Makkah Ventures.

Wealth Club sits in a totally unique space: it's not small-scale crowdfunding and it's not a private equity house, which is perfect for a fast-growing technology business like Pavegen. I was really impressed with their level of diligence on the deal beforehand and also the deal cadence once we went live on their platform. We had a constant heartbeat of investors getting involved, asking questions, and eventually investing, a wide mix of investors from proven entrepreneurs who want to get involved in the business to HNWI who want to support our growth.

Laurence Kemball-Cook, Founder and CEO, Pavegen Systems Ltd

EnterpriseAlumni EISEnterpriseAlumni EIS (Wealth Club single company deal)

Dubbed “the Facebook for ex-staff”, EnterpriseAlumni has created a platform that enables corporations to engage with former employees – and access a virtual warehouse of talent,customers and advocates.

Since its software launch in 2016, the platform has won over £12.5 million of multi-year recurring revenue contracts from 28 global blue-chip clients – including Google, LinkedIn, JP Morgan, HSBC, Citi and Coca Cola.

Co-founded by successful serial entrepreneur Emma Sinclair MBE – the youngest person to ever float a company on the London Stock Exchange – and her brother James, EnterpriseAlumni has been backed by some high-profile investors, including Octopus Investments co-founders Chris Hulatt and Simon Rogerson and Rosaleen Blair CBE (founder of billion-dollar recruitment business Alexander Mann).

Wealth Club investors invested £2.7 million in a round closed in September 2020.

I was very impressed by Wealth Club's clear and swift understanding of my business alongside corporate finance issues. The whole team worked to very high standards and project managed the fundraise from start to finish in a professional, efficient and friendly manner, raising just over £2.7m for my business in under six weeks. Wealth Club is a high-quality organisation that adds significant value to companies such as mine whilst providing Wealth Club members with off-market, high-potential exclusive investment opportunities.

Emma Sinclair, Co-Founder and CEO, EnterpriseJungle Inc. (trading as EnterpriseAlumni)

Unibio EISUnibio EIS (co-investment with Mitsubishi Corporation, investors of West Hill Capital)

Unibio International plc is a leading alternative protein company, which has developed patented technology to convert natural gas into high quality, sustainable protein for the animal feed market on an industrial scale. The Company operates a demonstration plant in Denmark while a production plant is being established in the US. The Company has a licensee operating a full-scale commercial plant in Russia, and signed a $200 million MOU in 2019 with the Saudi Arabian General Investment Authority to develop a facility in the Middle East.

The Company has raised over $50 million and has received significant backing from strategic investors, including Mitsubishi Corporation. Wealth Club investors have invested £2.8 million across three funding rounds in 2017, 2019 and 2021, alongside members of West Hill Capital.

What returns do single companies target?

Target returns will vary depending on the company. Factors that may affect target returns are the stage the company is at, the market in which it operates and its business model. 

What is Wealth Club’s role post-investment?

We try to stay close to the businesses we help raise capital so we can keep our investors updated and provide strategic input into follow-on rounds.

We usually require:

  • Information rights – this allows us to request and collate the information we use to prepare our six-monthly investor updates, tracking actual performance against plan;
  • Right to request appointment of a Non-Executive Director to represent the interest of minority investors, should we consider it necessary;
  • Typical board and shareholder level consent rights to be in place as well as an independent remuneration committee – this means management teams need board and/or shareholder consent to do certain things outside of their business plan, such as unbudgeted capital expenditure or raising debt or issuing more equity.

Wealth Club does not take a seat on the board so cannot influence the business the same way as is often the case with institutional investors taking a full board position.

What are the risks?

The main risk, common to all EIS investments, is that you are investing in young and unproven companies. They are statistically more likely to fail than their larger counterparts, so you could lose some or all your capital. 

This risk is even greater when you invest in a single company rather than a portfolio or fund: there is no diversification so if the company fails you have nothing to fall back on. 

A common rule of thumb for venture investing in startups is that out of a 10-company portfolio, you should expect three or four to fail completely, three or four to return capital and one or two to do well, in some cases well enough to outweigh the losses on the other investments. You should not invest money you cannot afford to lose.

Typically, the companies we offer our investors are later stage and more developed than startups. Our review process should also help mitigate some of the risks, but this remains a high-risk area of investment.

Failures can and will happen – they are part and parcel of venture investing. In addition, they tend to occur early on, whilst success takes much longer. EIS investors may find this uncomfortable. 

EIS tax relief provides a valuable cushion when things go wrong. Conversely, when things go right, returns are magnified. Tax rules change and benefits depend on circumstances.

That said, this type of investment is only for experienced investors, as part of a large and diversified investment portfolio. Don’t forget: besides the risk of failure, these are illiquid investments and you’re locking your money away for the long term (at least three years to retain the EIS tax relief, but usually longer). There are also other risks, such as loss of tax relief if the company becomes unqualifying, operational risks or key person risk – you should always appraise each company carefully. You should only invest based on the information provided in the Information Memorandum: please read all the offer documentation thoroughly.

Interested in raising funds through us? 

Please email [email protected] alongside any material that describes your business and the opportunity for investors. Alternatively, please call 0117 929 0511.