MMC Ventures EIS Fund
MMC Ventures is a well-established technology investment manager. This EIS portfolio aims to invest in 8 to 12 technology-enabled businesses.
- Evergreen EIS fund investing in technology-enabled businesses
- Focus on four sectors: fintech, digital media, consumer internet and business software
- Mix of new and follow-on investments
- £25,000 minimum investment
MMC Ventures started in 2000 as a syndicated investment service for high net worth individuals. It was founded by Bruce Macfarlane, the current managing partner, Alan Morgan and Allan Cockell. It launched its first EIS fund in 2005. Today MMC has over £200 million under management.
MMC has maintained a consistent investment style for 18 years. It only invests in high-growth technology-enabled businesses.
MMC was started as a vehicle for its founders and like-minded individuals to invest their own money. This ethos continue to this day. This helps aligns the management team's interests with investors.
Watch an exclusive video interview with Anna Slemmings and Henry Emson of MMC Ventures:
MMC focuses on four sectors: fintech, digital media, consumer internet (including ecommerce), and business software.
New investors into MMC’s EIS portfolio should receive approximately half of their investment into companies targeting consumers (B2C) and half into businesses selling to other businesses (B2B).
MMC does not invest into brand new firms. All companies must have sales and revenue, ideally annual sales of at least £1 million and up to £5 million in total sales. They will have often previously received business angel financing or seed money. MMC then assesses how much further financing is needed to reach a cash break-even point.
Any new potential deal is screened by two associates in the investment team. If they think it has merit they will meet the entrepreneurs behind the business. If this is successful, there will be a further meeting with the entire MMC investment team followed by a site visit. The team then presents a paper to MMC’s investment committee. The investment committee comprises founders Alan Morgan and Bruce Macfarlane alongside Jon Coker (co-managing partner). This committee has to approve all deals. Virtually the entire MMC team will meet a company prior to any investment.
In total MMC looks to invest £7 million to £10 million per company. It considers the sweet spot to be £1 million to £3 million in the first funding round , but MMC often co-invests alongside other institutional investors so the total deal size is closer to £5 million.
New investors are likely to have their money invested into 8 to 12 companies within the first 12 months – ideally into 10 companies, half new investments and half follow on ones.
As well as providing capital, MMC aims to engage with investee companies to help them grow and realise the best returns. They assist companies in areas such as senior hiring, strategy, fundraising, governance and exit.
Target return and Exit Strategy
The fund aims to return 2–3x the invested amount over a 4–7 year investment period. This is not guaranteed.
MMC assesses the routes to exit and considers potential buyers when it conducts its initial due diligence on investee companies. A listing on AIM is one exit route. Private equity and trade buyers have also bought companies in the past. Past performance is not a guide to the future.
Example companies previously held in the portfolio
Tyres on the Drive (TotD) allows customers to compare prices, order tyres online and have an engineer fit new tyres at a time and location of their choice.
MMC first invested in 2012 when TotD had one regional depot and 7 vans. Since that investment TotD has seen strong year-on-year sales growth; it now has 8 regional hubs and covers 85% of the UK.
MMC invested in the firm as part of a £10.5m funding round in January 2017, with Halfords plc providing £8m of this to acquire a minority stake.
Signal Media is a media monitoring platform that uses AI (artificial intelligence) to help knowledge workers, communications teams and research executives to monitor markets and get actionable business insights from the world’s media.
The company principally targets the financial services, legal and professional services sectors. Its clients include Freshfields, Old Mutual Wealth and PageGroup.
MMC first invested in Signal Media in late 2016 as part of a £5.8m funding round, co-investing with Hearst Ventures. More recently, they were the biggest contributor in a £16 million series B funding round. The funding will be used to drive expansion into new markets, power AI product development and grow Signal’s team.
Gousto is a recipe box business that delivers a weekly box of healthy, responsibly-sourced ingredients, providing everything needed in the right quantities for couples or families to cook. The business has grown rapidly: it now has more than 200 employees and delivers around 100,000 meals every week.
An investment round completed in March 2018 brought in an additional £28.5 million of funding. MMC Ventures participated alongside Hargreave Hale and BGF Ventures.
There is a high risk of losing capital. MMC states investors should assume a failure rate of about 25% as these are earlier stage, high growth opportunities.
The usual risks with unquoted companies exist with this EIS offer. For instance, EIS investments are illiquid and capital is at risk. Investors should only invest money they cannot afford to lose. Tax benefits will depend on individual circumstances and tax rules can change.
A summary of the fees and charges is shown below.
|Full initial charge||3%|
|Annual custodian fee||Nil|
More detail on the charges
MMC Ventures is a credible and experienced venture capital company. It focuses on four key high-growth areas and has invested in these sectors consistently for a number of years. The fee structure is aligned with investors’ interests: from year three the annual fee is accrued but only paid to MMC after the first exit. We also like the fact that the management team invests a significant amount of their own money in the fund.
Wealth Club aims to highlight investments we believe have merit, but you should form your own view. You should decide based 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. 30.08.2018
- Target return
- 2–3x investment
- Funds raised / sought
- £28 million raised
- Minimum investment