Earthworm EIS

Earthworm specialises in environmental EIS investments. This fund will invest across three sectors: food, energy, and waste, backing projects that will have a positive social or environmental impact.

Highlights

  • Environmental focus
  • Specialist management team
  • Target return of £1.20, not guaranteed
  • Investors are expected to hold a minimum of three companies
  • Minimum investment £10,000

The manager

Earthworm was founded by Ben Prior, a corporate financier, who has been investing in tax-advantaged products since 2001. His experience led to him co-founding RAM Capital LLP, the promoter of the fund.

Earthworm was launched to fund projects that not only create profit for investors but also offer positive social and environmental benefits. The company now manages over £100 million of investor assets and donates 10% of its profits to charity and reinvested another 10% back into future innovation for sustainable development.

The fund is supported by a management team of industry professionals from sectors such as construction, energy and infrastructure.

The offer

The typical deal size is expected to be between £500,000 to £2.5 million with investors holding a minimum of three investee companies, not guaranteed. To date, Earthworm has raised over £50 million through its EIS fund.

The fund will look to deploy into companies within the environmental sectors, with a particular focus on food, energy, and waste. Each of these areas should assist the UK either in contributing to its recycling targets, developing sustainable energy or lowering its dependence on food imports.

Investee companies or developments will be assessed for their prospects, employees, customers, accreditations, and premises. Opportunities will be identified that offer a balance between sustainability and commercial potential.

Target return

The fund's target return is £1.20 per £1 invested. However, returns are not guaranteed.

Exit options

The fund is a medium to long term investment and its expected holding time frame is six years. The most likely route to exit will be a trade sale although flotation and management buyouts would also be considered. However, please remember that exit options and time frames are not guaranteed.

Example portfolio companies

The companies listed below are from previous iterations of the fund and may not be included in future portfolios.

Earthworm Operations Ltd – Earthworm EISEarthworm Operations Limited - historical investment

The first project funded by Earthworm was a single company composting facility in Northamptonshire. The concept behind the investment was to not only make a successful commercial venture but to also give the team first-hand experience with large-scale environmental projects.

Over six months, the team raised £2 million to plan, design and build a 30,000-tonne compositing facility. The plant was designed around In-Vessel Composting (IVC) – an alternative option to the typical compositing process. This means that the system does not require agitation, biofiltration or external heating.

The business was exited in October 2016. Please note, this investment was made under previous EIS rules and so does not reflect the new investment strategy.

WeedingTech – Earthworm EISWeedingtech - recent investment

A cleantech company, Weedingtech treats weeds and moss using environmentally friendly hot foam, replacing the need for harmful herbicides.

The company has gained traction in recent years as governments and regulators have become increasingly concerned about the risks of relying on chemical herbicides. Just this year, France enforced a ban on weedkillers containing glyphosate, a potential carcinogen. Weedingtech has already been adopted by UK businesses like Yeo Valley Family Farms and Southwest Water and has expanded into countries across Europe and North America.

Earthworm invested £2.2 million in April 2019. The investment will be used to help support the company’s growth in North America.

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.

Charges & savings

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 6%
Wealth Club initial saving
Net initial charge through Wealth Club 6%
Annual management charge 2%
Administration charge
Performance fee 30%
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

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
Environmental
Target return
1.2x
Funds raised / sought
£11.9 million / £25.0 million
Minimum investment
£10,000
Deadline
Discretionary
Last updated: 25 September 2019

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