Vala EIS Portfolio
The team behind the Vala EIS portfolio has been founding and investing in early-stage businesses for years. The fund will invest across a range of sectors from engineering and fintech to media and food & drink. The Vala Capital team will provide expertise and mentoring to the portfolio companies, and invest their own money. The simple fee structure of the portfolio might be attractive to investors.
- Invests across a range of sectors, including technology, engineering, media and consumer
- Target return 2x net of fees and before tax relief – not guaranteed
- Management team has first-hand experience of setting up and exiting businesses and will mentor portfolio companies
- Targets 6-10 portfolio companies (not guaranteed) with Advance Assurance
- Tranches closing regularly, with allotments every three to six months
- Visibility of companies considered for investment
- Simple fee structure for investors
- Minimum investment £25,000
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Vala Capital Ltd was founded by Jasper Smith, now the company's CEO.
He started his career at Sky in the UK when it was a startup, then moved to TeleNor to launch TV services across Scandinavia.
His first entrepreneurial venture in the mid-90s was as co-founder of The Fantastic Corporation, a pioneer in satellite and broadband data services.
Since then he has founded or co-founded a number of businesses including:
- Static 2358, a design and digital media company (sold)
- Electra Entertainment, a once widely deployed TV technology platform (closed)
- The Optimistic Network, a media & IP production company (IPO on AIM in 2005 with an initial valuation of £27 million)
- PlayJam, originally a side project of Static 2358, was a pioneer of the games industry and once one of the world’s largest game networks. The two companies were sold for approximately $59 million in 2001, then reacquired in 2008 (Jasper is still a board member)
- PlayStack, a major games publishing and financing company
- Play.Works a tech company working on post app store tech and games
- Arksen, a company developing semi-autonomous explorer vessels for pleasure, research, and commercial purposes
Jasper Smith sits on Vala’s investment committee, alongside Arthur Hughes, Paddy Willis and John Swingewood. Jasper has known and worked with each of them for many years. In addition, they all have previous experience at starting, growing and exiting businesses.
Arthur Hughes is an experienced financier who took over and became Group CEO of broking business Prebon Yamane, which was sold to Collins Stewart Tullett for £125 million in 2004 (and later become Tullett Prebon).
Paddy Willis co-founded baby food company Plum Baby. Plum Baby became one of the UK’s fastest-growing food start-ups, and was sold to Darwin Private Equity in a deal which valued the company at £10 million.
John Swingewood was previously Chairman of CentralNic, a domain name registry service that floated on AIM. He was also founder of DITG and chief executive of Emizon, both of which achieved exits through successful trade sales. Earlier in his career, John held senior roles at BT and BSkyB.
Between them, they have invested £26 million of their own money in early-stage businesses and achieved a number of successes, as well as experiencing what it is like to lose one’s own money when things go wrong.
Vala targets companies it believes have high-growth potential across a range of sectors including technology, engineering, fintech, media & entertainment, lifestyle brands and food & beverages.
In many cases, the investee companies will have often already started to sell products or services and require funding to accelerate their growth. In addition to providing funding, Vala acts as mentor, offering investee companies access to its team’s expertise, network, and experience.
In some cases, Vala’s involvement is greater: it helps create, incubate and accelerate the companies before investing. Whilst this could be seen as a conflict of interest, it also means Vala has a real understanding of the businesses and should be in a good position to help them grow.
Before receiving investment, each company undergoes extensive due diligence, which the Vala team performs in collaboration with professional advisers with experience in the relevant sector.
Vala’s team hopes to return to investors 2x the amount they subscribe, net of Vala’s fees and before EIS relief. Returns from this sort of investing are hard to predict. The performance of each company will vary, and the manager expects the bulk of investor returns to come from the sale of the two or three most successful companies in the portfolio. This is a risky investment – you could lose what you invest.
The ultimate goal for each portfolio company is to achieve an exit, to allow the Vala EIS Portfolio to produce a profitable return to Investors. The companies may be acquired by other parties (such as a bigger company in the same industry or a private equity firm) or listed on a stock exchange – the Vala team has previously exited investments through both routes.
At the time of the initial investment, it is impossible to know how long a company might take to reach an exit. However, Vala Capital and the Investment Manager will work closely with the companies during any exit process. Exit options and timeframes are not guaranteed.
The Vala EIS Portfolio has regularly closing tranches, usually every three to six months, aiming to complete investments into a number of companies over a concentrated period of a few days.
For each tranche, the manager gives investors a list of the companies being considered for investment.
Some of the companies considered for investment in the next tranche (deadline 30 September 2019) are listed in the “Next tranche investments” document. Each company is on track to conclude Vala’s due diligence and investment committee processes, although things can and do change.
Examples of previous portfolio companies include the developers of semi-autonomous explorer yachts, a wholesale bakery business who distributes its goods across the UK and overseas and a video gaming company targeting the Instant Messaging sector.
Great British Biscotti Co.
The Great British Biscotti Co. is a Dorset-based biscuit brand that started life as a micro-bakery in 2016. It claims to have created the world's first “tea-centric biscotti” (traditional almond biscotti are normally associated with coffee) as well as the world's first savoury biscotti to accompany soups, salads or cheeseboards.
The business grew quickly, and to keep up with demand the company bought its own factory. The company’s fresh and creative products are now distributed across the UK and overseas.
Arksen was established to drive deeper knowledge and research of the ocean through its multi-purpose vessels.
Arksen’s bread and butter is high-tech semi-autonomous yachts designed to withstand the harshest ocean conditions safely and comfortably. Jasper Smith describes the yachts as “the Land Rover of the sea with the tech of a Tesla.”
The potential order book currently stands at around £40 million – between three and five are expected to be built a year (they’re all assembled on the Isle of Wight). The company is also linked to the Arksen Foundation - a not-for-profit organisation set up to provide project funding and support for scientific research and create innovative media to inspire a greater understanding of the ocean ecosystem.
The Vala EIS Portfolio in its current form launched in 2019, so it is too early to have any performance data.
That said, various members of the Vala team have a personal track record.
They have provided funding of £28.5 million to 35 companies since the 1990s. 14 of these companies have subsequently failed. 21 have delivered a successful exit, with a total exit value of £143.3 million. Please remember past performance is not a guide to the future.
This experience means the Vala team understands what can, and does, go wrong. It also means they know first-hand what it takes and what it feels like to make and lose their own money.
When we interviewed Jasper Smith, we asked him about his investment failures alongside the success stories.
Electra Entertainment Ltd was a technology company focused on creating technology and interactive services for digital televisions and set top boxes. Electra won early support from leading retailers but ultimately lost out to Freeview. Jasper lost in the region of £5 million of his invested capital in the firm.
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.
Fees and charges
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||—|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||—||Annual management charge||—|
|Performance fee||20%||Investee company charges|
|Initial charge||6%||Annual charges||—|
More detail on the charges
Read important documents and apply
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.
- Target return
- Funds raised / sought
- Minimum investment
- 30 Sep 2019 for next tranche