Boundary Capital AngelPlus SEIS
The Boundary Capital AngelPlus fund, available for both EIS and SEIS investment, is an opportunity to invest in early-stage, high-growth technology companies alongside experienced entrepreneurs. Co-investment alongside business angels is a central theme of the offer.
- Early-stage technology companies
- Investors will hold 4 to 8 portfolio companies
- Co-invests with business angels, entrepreneurs and professional investors
- Expected exit in five years – not guaranteed
- Minimum investment £20,000
Boundary Capital Partners LLP is a venture capital firm investing in early-stage technology companies with a particular focus on Information and communication technology and electronics, green/clean tech, materials and chemistry, and healthcare and life sciences. Established in 2009, Boundary Capital collectively has 60 years of venture capital experience. It has a network of 300 investing directors. Managing Partner Dan Somers has founded several IT companies including video conferencing business VC-Net and predictive analytics company Warwick Analytics. Mr Somers holds an MA in Natural Sciences from Cambridge University and a Diploma in Business studies.
Boundary Capital aims to invest in technology-based or knowledge-intensive companies which are capital-efficient and have the potential for high growth. It believes the risk factors in such companies often revolve around their ability to execute commercially, get product market fit and scale. Supporting these companies, which often have technical founders, with the right expertise is one way to mitigate these risks.
As well as providing capital, Boundary offers expertise in the form of ‘Venturers’ to the companies in which it invests. Boundary has access to an extensive proprietary network of entrepreneurs and executives. Boundary will only invest if an appropriate ‘Venturer’ is willing to co-invest on the same terms and take a seat on the investee company’s board. This helps align interests and qualify the investee company’s management team, as well as mitigate some of the risks.
Investors will invest in between four and eight investee companies, with the aim to exit after the fifth year, which is not guaranteed. Potential exit routes include trade sales, IPOs, MBOs and company buybacks.
Boundary Capital sees 500 to 600 deals every year. Of those, 100 make it to investment committee level where they are given a full review. Around 40 companies’ management teams are then interviewed and an appropriate Venturer sought. Four to eight companies are selected for investment.
To receive investment, a company must have:
- Strong and committed management team (any gaps may be filled by later recruitment or a Venturer appointment)
- Disruptive and potentially global protectable technology with a defined market need
- Evidence of customer traction
Additionally, Boundary tends not to invest if it deems the business to be too capital intensive, if a stake of less than 5% is available or if there is no plan B (i.e. it is an ‘all or nothing’ proposition).
Fund investors are offered the ability to top-up their investment by co-investing further on the same terms as the fund. Boundary aims to leave some investment headroom for a limited period for its own investors to decide whether they would like to make further investments in a particular investee company. The availability of this option depends on the situation and the value of the investor’s original investment.
The chart below shows the net return of investing £100 in the fund in the tax year indicated. For example, £100 invested in 2013/14 would have returned £182. There is a small increase to date for funds invested in 2015/16, and for later versions of the fund, there is no published change as yet due to the limited valuations available on unlisted securities.
The table below shows the annual value of £100 invested for each fund to April each year.
|Fund launch date||Apr 14||Apr 15||Apr 16||Apr 17||Feb 18|
|2013/14 (Apr 13)||100||100||151||151||182|
|2014/15 (Apr 14)||n/a||100||100||198||229|
|2015/16 (Apr 15)||n/a||n/a||100||100||101|
|2016/17 (Apr 16)||n/a||n/a||n/a||100||100|
Examples of previous investments
Image Scan Holdings (exited)
Image Scan Holdings, whose main trading subsidiary is 3DX-RAY, manufactures x-ray devices for security and industrial applications, particularly portable security devices. Boundary invested in September 2014. Bill Mawer was an experienced executive in the security X-Ray market having lead Smiths Detection. He was originally a Boundary Venturer and became CEO of the firm.
He set out to refresh and rationalise the product range. The company engaged with a new set of partners to improve technical capability, supply chain, and distribution to streamline operations. Boundary achieved an exit in November 2017, just over three years since initially investing. The return was over 4x to investors. Remember past performance is not a guide to the future.
In August 2013, Boundary Capital invested in Desktop Genetics Limited, an award-winning genome editing software company. Desktop Genetics enables scientists, particularly those involved in the CRISPR genomics revolution, to design and execute experiments and interpret the resulting data. The company was formed by three postgraduates from the University of Cambridge.
Dr Darrin Disley put himself forward as the ‘Venturer’ and became Non-Executive Chairman. Dr Disley co-invested on the same terms as other investors, with additional share options to cover his active involvement. He is a serial entrepreneur and the CEO of Horizon Discovery plc, one of the fastest-growing newly listed British life science companies. Along with Dr Disley, strategic co-investment came from other experienced angels including Dr Jonathan Milner, founder and CEO of Abcam plc.
AB-Polyblok has developed technology with the potential to treat and partially reverse the effects of Alzheimer’s Disease, the largest cause of dementia. It is estimated that 46.8 million people worldwide live with dementia (2015) and that this number will almost double every 20 years, reaching 74.7 million in 2030 and 131.5 million in 2050. There are several drugs to temporarily relieve symptoms and a huge amount of R&D although all are long-term projects with few breakthroughs to date.
The inventor of the technology was looking for help to develop and commercialise it. Boundary provided investment as well as the support of Venturer Dr Adrian Parton OBE, a serial entrepreneur with a specialism in life sciences. The typical challenge with life science therapeutics is the huge investment required in laboratory work and trials. Dr Parton planned a series of experiments and R&D to prove efficacy and generate data to then file the appropriate IP.
The company demonstrated efficacy in both in-vitro and in-vivo experiments: its drug shows the potential to reverse the effects not only of Alzheimer’s but also Parkinson’s and Huntingdon’s Chorea.
This is a high-risk offer. These are early-stage businesses, so they will be more prone to failure than later stage, more mature businesses. It is also likely they will require multiple rounds of funding thus diluting the stakes of earlier investors. These are long-term investments.
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 can afford to lose.
Charges are levied on investee companies rather than directly on the investor, so more of the initial investment benefits from tax relief. There is an initial charge of 5.5%. There is a 2.0% annual fee paid by the companies to cover monitoring and £150 per month for administration. Director fees may be payable by the company depending on the level of support given.
A performance fee of 20% is due on amounts returned above £1.10 for every £1 invested. Other fees may apply: more information is in the Information Memorandum and the Key Information Document.
This is an interesting EIS and SEIS. It invests in early-stage companies with high growth potential but also high risk. The co-investor model has benefits, and the individuals involved have strong credentials.
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. 02.03.2018
- Target return
- 25% per annum
- Funds raised / sought
- Minimum investment
- Closed for 2017/18; will reopen in 2018/19