Jenson SEIS Fund

The Jenson SEIS Fund is one of the longest-running SEIS funds, having been established the year the scheme was introduced, in 2012.

Jenson Funding Partners (“JFP”) is an early-stage investor. It follows a broadly generalist strategy, with a preference for tech-enabled businesses with a defensible offering. Companies will primarily be sourced from JFP’s existing network and those with potential may ‘graduate’ into the Jenson EIS Fund.  

To date, JFP has launched seven SEIS funds and five EIS funds. Combined, the SEIS funds have more than £15 million in assets under management, split across a portfolio of over 100 companies.

The SEIS funds have exited nine businesses. Of these, seven generated positive returns: a mix of net cash returns (1.5x investment cost before tax relief on average) and, in two cases, deferred and non-cash payments (2x unrealised return on average), such as shares in the acquiring company. There were also two failures. Past performance is not a guide to the future – these are early-stage companies, which can and do fail. The portfolio failure rate is 40% across 107 companies (as at December 2020).

Highlights

• Generalist SEIS fund with a preference for tech-enabled businesses 
• Aims to invest in 8 to 12 investee companies
  
• Highly active SEIS manager with over 107 investments in 8 years
• Extensive deal sourcing network 
• Evergreen fund
• Target return of 185p per 100p invested (not guaranteed)
• Minimum investment £10,000 - you can apply online

The manager

Jenson Solutions Ltd (“JSL”) was established in 2001 by Paul Jenkinson and Sarah Barber, to provide strategic, financial, and operational solutions to small businesses. In response to the introduction of the Seed Investment Enterprise Scheme, the pair set up Jenson Funding Partners (“JFP”) in 2012, with the aim of raising and providing capital to early-stage businesses. 

Since then, JFP has launched seven SEIS and five EIS funds, deploying £17 million into over 100 businesses. 

The funds are managed by a core team of seven, led by Sarah Barber and Jeffrey Faustin. Mr Faustin has a background in engineering and made the transition to finance after completed an MBA in 2012. He joined JFP in 2013 and is now Chief Investment Officer and Partner, he is responsible for managing all aspects of the investment process. The investment team will have access to the resources of JSL where required.

Investment strategy

JFP has built an extensive sourcing network that includes incubators and accelerators, universities, corporate finance houses, professional services providers, VC and PE houses.

Jenson favours businesses addressing market gaps and with scalable business models, run by ambitious and driven entrepreneurs.

All potential investee companies are required to make two presentations: first to the selection committee and, if successful, to JFP’s approval committee. JFP also conducts extensive pre-selection assessment, interviewing the management teams over a series of calls and meetings to determine their suitability for the fund.

Post-investment, a JFP portfolio manager or a nominated non-exec director attends board and senior management meetings. Regular contact allows the team to monitor progress and provide support when needed, prepare companies for the next stage of growth as well as help avoid common pitfalls.

Until recently, JFP offered a mandatory ‘Investee Support Package’ for fee. This has now been replaced by a more tailored approach, offering companies direct introductions to trusted third-party service providers. For example, JFP connected several of its companies with a contact who had prior experience in scaling B2B SaaS businesses. The individual helped the businesses structure their value propositions and sales processes.

Target return

The fund targets a return of £1.85 for every £1 invested, excluding 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 107 investments since its first SEIS investment in 2012.

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.

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

Of the fund’s 107 investments, the current portfolio failure rate is approximately 40% (as at December 2020). JFP has exited nine companies from its SEIS funds (of which two at a loss). Five of these were cash exits and two were share deals, whereby JFP obtained shares in the acquiring companies. The current net cash return is 1.5x of the investment costs (before tax reliefs). Please note: past performance is not a guide to the future.

The chart below shows the average performance of the total subscribed into the fund each tax year, based on valuations as 20 February 2021, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.

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.

The next tranche deadline is expected to be 31 August 2021.

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. JFP may, therefore, be seen as a destination for entrepreneurs seeking seed investment – this could enhance its access to deal flow. While the investment team is small in proportion to the number of companies in the portfolio, JFP has been active in this area for almost a decade and is confident in its ability to continue identifying and supporting promising companies. 

The recent change to the fund’s charging structure should be welcome news to investors, offering a more tailored support package to investee companies without a mandatory fee.

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.