Symvan Technology EIS Fund

The Symvan Technology EIS Fund offers investors exposure to early-stage technology businesses which are potentially disruptive in their sector and have high-growth potential. Symvan has a particular focus on ‘post-seed’ financing, where companies have already raised early-stage funding and have now grown too large for angel investors, but too small for lower/mid-market funds.

Highlights

  • Exposure to early-stage technology companies which fit into the ‘equity gap’ requiring between £250,000 to £2 million
  • Concentrated portfolio – four to six investments typically held 
  • Investment selection puts strong emphasis on management teams
  • Collaborative approach with technology incubators, including Microsoft 
  • Minimum investment £20,000

The manager

Symvan Capital was founded in 2013 and launched the EIS fund in 2016. It is a technology venture capital fund manager. 

CEO and co-founder Kealan Doyle has worked with venture capital firms for 15 years as a corporate finance advisor and fund manager. He worked at HSBC, Deutsche Bank, Merrill Lynch and UBS. Investment Manager and co-founder Nicolas Nicolaides worked at Lehman Brothers and BNP Paribas. His focus at Lehman Brothers was on European telecoms and media. Whilst at BNP Paribas he worked on the TMT Corporate Finance team.

Strategy 

Symvan looks to invest in a company across its life-cycle. The capital needs of a business are considered from first investment through to exit, so as well as providing any initial SEIS funding, they consider the requirements for follow-on EIS funding. The EIS fund has made investment commitments to four companies that previously received funding from the Symvan SEIS. 

Symvan believes the competency of a management team is one of the most critical factors in determining whether a business achieves early success or failure. Symvan’s SEIS fund provides a rich source of deals for this EIS fund and means Symvan has a deep understanding of the management team, having worked with them for years. 

Their sister business, Symvan Securities Limited, has a strong angel network, and this has also proved to be a strong source of funds. 

Symvan often invests alongside technology incubators or accelerators. These help to create and grow young businesses by giving support, financial and technical services. Companies within an incubator can benefit from shared facilities and workspace, as well as support through networking and potentially providing commercialisation opportunities. Moreover, accelerators may provide a natural exit route. 

This is a concentrated portfolio. This is where Symvan uses the phrase ‘deeper not wider’. Fewer investments means more focus and the opportunity to be highly selective. It gives them more time to understand the business better and not have to be rushed into completing investments. The downside is that this increases the risk profile and decreases diversification. 

An example of a previous portfolio company

Cognisess is a predictive people analytics company. The Cognisess SaaS platform uses cognitive neuroscience and machine learning to help solve recruitment challenges and to better select, recruit and manage talent. 

Cognisess came to Symvan through the first cohort of the Microsoft Ventures Accelerator Programme in London. By this stage, the company had developed the product and had taken on its first pilot clients. 

Symvan was attracted to the business by the management, the existing client base (it already counted Ford and PayPal as customers), clear ownership of the intellectual property and the scalability of the Cognisess offer. Since the initial investment in 2015, several new clients have been acquired: Intercontinental Hotel Group, Volkswagen UK and Uber in Australia. 

Cognisess was originally seed funded by Symvan and further follow-on funding was later provided by Symvan's EIS fund.

Please note that this is a previous investee company of the fund; new investors will be exposed to different companies.

Fees

The fees are paid by the investee companies, rather than from the subscription, which maximises tax relief for investors. There is an initial charge of up to 6% of the total subscriptions and an annual monitoring fee of 2% applies. A 20% performance fee on a hurdle of £1 will also be due. Other fees may apply: see the Information Memorandum for full details.

Risks

These are early-stage technology businesses and by nature these firms will be more prone to failure than more mature businesses. All of the portfolio companies could fail. Diversification is limited, and this is a very concentrated portfolio of these high-risk firms.

Specific risks in this sector include failed software, patent application failure and intellectual property infringements.

Investors should also be aware these are long-term investments and are illiquid. Capital is at risk and investors should not invest money they cannot afford to lose. Tax rules can change and the value of tax benefits will depend on individual circumstances.

Our view

Symvan’s offer allows individuals to invest at an early stage that would not normally be available to private investors, whilst benefiting from very generous tax reliefs. This EIS benefits from being able to provide follow on funding to the more successful companies from the Symvan SEIS fund. Remember, although Symvan has not had any failures to date, early-stage technology investing is synonymous with high failure rates, making this an inherently risky investment. 

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 21.12.2017

The details

Type
Fund
Sector
Technology
Target return
Unspecified
Funds raised / sought
£10 million sought
Minimum investment
£20,000
Deadline
Discretionary

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