Symvan Technology SEIS Fund 3

The Symvan Technology SEIS Fund offers investors exposure to early-stage digital technology businesses. 

Highlights

  • Exposure to early stage companies with a bias towards digital technology and application software
  • Four to six investments typically held
  • Target return of £2.85 per £1 gross invested, after five to seven years (not guaranteed)
  • Investment selection puts strong emphasis on competent management teams
  • Collaborative approach with technology incubators, including Microsoft
  • Aims to deploy investments in 2018/19, so not available for carry back to 2016/17
  • Minimum investment £10,000

The manager

Symvan Capital launched in 2013 and entered SEIS management a year later. 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 the European telecom and media sector. 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 funding they consider the requirements for follow-on funding, something early stage companies often require. 

Symvan spend time getting to know the management team of a business before they consider investing. They believe the competency of a management team is one of the most critical factors in determining whether a business achieves early success or failure.

Symvan Securities Limited has a strong angel network which has proved to be a good source of funds to date.

Symvan typically invest 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 relatively concentrated portfolio. This is where Symvan use the phrase ‘deeper not wider’. Fewer investments means more focus. It gives them more time to understand the business better and not have to be rushed into completing investments. The downside is that this ups the risk profile and decreases diversification.

An example of a previous portfolio company

Cognisess is a predictive people analytics company, headquartered in Bath. 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 from 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 (which included Ford and Paypal), clear ownership of the intellectual property and the scalability of the Cognisess offer. Since the investment in 2015 several new clients have been acquired: Intercontinental Hotel Group, AB InBev, Volkswagen UK and Uber in Australia.

Cognisess was seed funded by Symvan and then went on to raise follow-on funding from 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, like many SEIS investments, are high. They are paid by the investee companies, rather than from subscription, which maximises tax relief for investors. There is an initial charge levied at the company of 10% plus fixed launch fees. An annual fee of £3,000 is paid by the investee company. A 20% performance fee will also be due. Other fees may apply: see the Information Memorandum and Key Information Document for full details.

Risks

These are very early-stage technology businesses. By nature these firms will be more prone to failure than later-stage, more mature businesses. All of the portfolio companies could fail. This is a relatively 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

Early-stage tech investing is in vogue. From Woodford’s investment trust to Silicon Valley angels, it seems everyone is at it. Symvan’s offer lets investors invest at a very early stage whilst benefiting from very generous tax reliefs. Remember, 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
£2.85 per £1 invested
Funds raised / sought
£1.5 million sought
Minimum investment
£10,000
Deadline
Discretionary

News about Seed Enterprise Investment Scheme. Read all