Jenson SEIS Fund

Jenson Funding Partners (“JFP”) has invested £16 million into more than 100 companies since 2012. JFP initially built an SEIS portfolio before launching its EIS fund. In total, JFP has launched five SEIS funds and four EIS funds. 

JFP is a generalist early stage investor and will invest across a range of sectors, although there is preference for technology. Companies will primarily be sourced from JFP’s existing industry network and those with potential may ‘graduate’ into the Jenson EIS Fund.  

To date, JFP has exited six companies from the SEIS portfolio, generating a return of 5.1x across a mixture of cash and equity (before tax relief and performance fee). Past performance is not a guide to the future and these are early-stage companies, which can and do fail. The portfolio failure rate is 38% across 108 companies (April 2020).

Highlights

• Generalist SEIS fund with a preference for technology businesses 
• Aims to invest in 8 to 12 investee companies
  
• Evergreen fund
• Target return of 185p per 100p invested (not guaranteed)
• Minimum investment £10,000

The manager

Jenson Solutions Ltd (“JSL”) was established in 2001 by Paul Jenkinson, an experienced corporate financier. JSL provides strategic, financial, and operational solutions to small businesses. To complement this service, the company set up Jenson Funding Partners in 2012, with the aim of raising and providing capital to early-stage businesses. 

Since then, JFP has launched five SEIS and four EIS funds, deploying £16 million into over 100 businesses. 

Both the SEIS and EIS funds are managed by a core team of three, led by Jeffrey Faustin. Mr Faustin has a background in design consultancy and advising clients on complex commercial and infrastructure projects. He joined Jenson in 2013 as Investment Director and is now responsible for managing all aspects of the investment process. The investment team will have access to the resources of JSL where required.

Investment strategy

The SEIS fund aims to focus on innovative and disruptive technology firms. All prospective companies will be assessed for the following criteria:

1. Momentum
2. Strong concept and strategy
3. A credible management team
4. Business and financial risks
5. Equity deal and exit expectations

At the SEIS level, companies are expected to either be generating revenues or have a clear path to revenue generation. Management teams must have evidence of market potential, either through testing, external validation or by securing pre-orders. JFP will seek businesses addressing market gaps and those with non-capital intensive business models to help maximise scalability.

Deals will be sourced using JFPs existing network of entrepreneurial clients, corporate finance contacts, incubators, and angel investors. JFP will consider companies from a wide range of sectors and geographical locations.

All investee companies take part in JFP’s “Investee Support Programme”. This includes a core package which covering business functions such as corporate governance, business development and accounting services. The core package is mandatory for the first year after investment and costs £500 a month per company. JFP will also offer more specific ancillary services (for an additional fee) such as assisting with grant applications, legal services, and funding preparation.

Target return

The fund targets a return of £1.85 for every £1 invested (after tax relief) over a period of five to seven years, not guaranteed.

Exit strategy

It is anticipated most exits will take place between five to seven years after investment, although this could take longer depending on the company and market conditions. JFP will look at a number of exit strategies including trade sales, listing on a stock exchange, or selling its shares to a larger private equity firm. Exit options and timeframes are not guaranteed.

Portfolio

JFP is a generalist investor but it prefers technology-based businesses (currently around 60% of the portfolio). In total, Jenson has completed over 108 investments since its first SEIS investment in 2012; of these, over 90 were made through the SEIS funds.

SEIS investors will receive a portfolio of between 8 to 12 companies, with an expected holding period of 5-7 years, not guaranteed.

Below are portfolio company examples from previous iterations of the fund. They are outlined to give a flavour of the types of companies you might expect but are unlikely to be part of a new investor's portfolio. 

Examples of previous portfolio companies

Voneus

Voneus works with rural communities to provide high-speed broadband across England and Wales.

Founded by telecom veterans, Voneus can connect wirelessly to existing Superfast fibre networks using a series of transmitters. To access the new connection residents simply need to install a small receiver in their home. Current speeds are between 30-50Mbps, which should be more than enough to stream TV, use teleconferencing software or work remotely.

Voneus currently supplies thousands of homes across 50 rural communities. In August 2019, the company received £10 million in funding from Macquarie Capital, which it plans to use to upgrade its network and work towards its target of supplying up to 900,000 homes.

Jenson first invested £150,000 through its SEIS fund in 2013 and has provided an additional £420,000 in EIS funding since then. As at April 2020 Voneus was valued at £14 million, remember past performance is not a guide to the future.

eTEU

Shipping is a growing industry but the paperwork associated with it can be complex and cumbersome. It can be particularly hard for smaller businesses to keep on top of it.

eTEU aims to make the paperwork associated with shipping simpler and more efficient by providing high tech solutions at low cost

eTEU helps SMEs digitise and automate the process for producing legal paperwork, helping to prevent unnecessary delays for the entire shipping supply chain.

JFP invested into the company in May 2020 through its SEIS fund.  

Twizoo - recent exit

Twizoo uses AI technology to automatically capture user-generated content and create real-time reviews. Madeline Parra and John Talbott, the company’s founders, developed the idea after noticing that restaurants received nearly 7x more exposure on social media than on conventional reviewing platforms.

A mobile application, Twizoo scans and analyses real-time conversations to generate user reviews and sentiment. The technology can be applied to something as simple as suggesting popular bars or restaurants to acting as a social media monitoring platform for businesses.

Jenson originally invested £150,000 into the business through its first SEIS fund. The funding was used to launch a beta version of the product and to prove the business model. As a result, the company was acquired by Skyscanner via a trade sale in November 2017. Investors received a significant uplift on their original investment, however, past performance is not a guide to the future.

Tapfuse

As is to be expected with young companies, not all succeed.

Jenson EIS and SEIS Fund 2 originally invested into Tapfuse, a mobile application developer, in 2015. The business created multi-platform applications so that information could be shared in professional and educational institutions.

The business started positively, gaining a number of potential clients and developing a strong sales pipeline. However, it lost momentum due to the founder's personal circumstances. Jenson investigated possible options once it became clear the founder no longer wished to continue with the business but ultimately struggled to find a viable alternative.

Eventually, Jenson was outvoted by Tapfuse’s other shareholders, and the business was put into administration in December 2018.

Performance

In total the fund has made 108 investments, of these, 41 are no longer trading. JFP has successfully exited six companies from its first two SEIS funds. Five of these were cash exits, with one exception being a mixture of cash and publicly traded stock. The current return is 5.1x with a mixture of cash and equity (before earn-outs , tax incentives and performance fee). Please note: past performance is not a guide to the future.

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 / 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 EIS / 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, or even be prepared for all companies to fail.

Exit could take considerably longer than the three year EIS minimum holding period.

Charges & savings

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.

Timing of the offer

The fund anticipates taking between 6-12 months to fully deploy investor capital following the closing dates. However, this is not guaranteed and it may take longer.

Our view

JFP is an active early-stage investor. It has amassed a sizeable investment portfolio of over 100 investee companies in its eight-year history and this could enhance Jenson’s access to deal flow. While the investment team is small in proportion to its portfolio, JFP has been active in this area for almost a decade. Investors should note the charges to investee companies, including the mandatory support package: you should form your own view on whether this represents value.

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.