Startup Funding Club SEIS Fund
As a nation, we are pretty good at startups. The UK creates more “unicorns” than any other European country. A unicorn is a startup now valued at more than one billion dollars. Examples include Zoopla, ASOS, and Just Eat.
Often, these unicorns are successful because they change the way consumers buy and use things. They provide better services, at lower cost, to grab market share or to develop completely new offerings.
Startup Funding Club targets bright young British businesses which possess innovative and disruptive technologies to deliver tomorrow’s products and services. The fund invests at a very early stage. Most of the businesses will have low or even no revenue at this point, so it’s very high risk for investors, softened somewhat by the tax relief. The manager actively expects 25% or more of the companies will fail.
- SEIS offer exclusive to Wealth Club for non-advised investors
- Evergreen fund investing in early stage disruptors
- Co-investment opportunities with a large network of business angels
- Target return of £3 per £1 invested (not guaranteed)
- Targets up to 10 portfolio companies in a range of sectors, including digital technology, life sciences and consumer goods
- Investee companies must have advance assurance
- Minimum £10,000
Read important documents and apply
Startup Funding Club (“SFC”) is an angel investment club focusing on very early-stage businesses. It identifies the opportunities for investment and provides ongoing support and expertise to the portfolio companies in which it invests. Since its inception, SFC has been involved in over 110 SEIS and EIS investments through its Angel Network and SEIS/EIS Funds.
The SFC angel network is a group of over 350 high-profile and active angel investors from various backgrounds, many of whom have direct experience in building and investing in a successful young company. They invest alongside SFC investors and bring additional funding and experience to the portfolio. Angel investors co-invest alongside the fund.
Once investments are made, Startup Funding Club provides support and expertise to the companies to nurture them and help them grow.
The manager of the fund is Enterprise Investment Partners LLP, which manages and administers over £100 million of SEIS, EIS and BPR funds.
Watch a video interview with investment manager Joseph Zipfel:
Startup Funding Club expects to have failures. In the manager's own words:
"Over time we expect the failure rate to be at around 25% and to have the top 15% of the companies delivering the bulk of the returns. Whether we manage to exceed or not our return target at a portfolio level (3x the invested capital) will depend on what the remaining 60% of the portfolio does. The overall performance will vary quite a bit whether we achieve mostly ‘small’ exits / break evens (1-2x) or if we manage to get a number of decent size exits (around 4-5x) which won’t be huge but would really drive up the performance".
Returns are targets only and are not guaranteed.
An example of a success in previous Startup Funding Club portfolios
Transcend Packaging is based in Ebbw Vale, Wales, and makes sustainable paper-based packaging and new bio-resin coated paper that can be used as a substitute for plastic.
One of the thing it makes is paper drinking straws. Consequently, it has benefited from the recent backlash against single use plastic.
McDonalds is replacing plastic straws with paper ones in all its UK and Ireland outlets. Transcend Packaging is one of two firms that has won a contract to supply these to the fast food chain.
An example of a failure
As is to be expected with very young businesses, SEIS companies can and do fail.
One failure in the Startup Funding Club previous portfolio is a company called VN Carbon Capture (Gas) Ltd which received investment in March 2014.
The company was formed to pursue the commercialisation of a discovery by researchers at the University of Newcastle allowing a cost-effective capture and recycling of CO2 using nickel nanoparticles which could translate into significant commercial potential. The investment was made on the back of a promising feasibility study and funds were used to run further laboratory tests and simulations with a view to develop the research into industrial technology. Unfortunately, the research showed the technology was not economically viable in real life conditions and did not get commercial traction despite receiving interest from the scientific community, the press and industrial companies. The company dissolved in 2017.
Startup Funding Club believes the lesson learnt is to focus investments on more advanced projects where the management can show evidence of the commercialisation potential and market validation. The failure showed a need to invest in “research-heavy” project only when the R&D work is fully funded.
Fees and charges
A summary of the fees and charges is shown below. Please see the provider’s documents for more details.
|Initial set up charge||2.5%|
|Investee company initial charge||6.5%|
More detail on the charges
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
SEIS 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 SEIS 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.
In a portfolio of ten companies, one might do very well (although there are no guarantees), several could fail and the others might just tick along.
Earlier-stage companies usually take longer to mature. Further funding rounds will be common so there is risk of dilution. Earlier-stage companies usually take longer to mature.
The Startup Funding Club SEIS Fund does what it says on the tin. It invests in UK startups. There are likely to be some winners and a fair few losers in the portfolio. We like the breadth and scope of this fund. It’s not without risk: the name says it all. For experienced investors keen to get exposure to the bright new businesses of tomorrow, we think this could be one to consider.
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
- £5.0 million sought
- Minimum investment
- 30 Mar 2020