The UK Enterprise Funding Scheme has been a powerhouse for UK startups as a result of it allowed angel buyers to put money into a really tax-efficient method.
Launched in 1994, it was designed to encourage funding in small, unlisted corporations. What Wikipedia I’ll inform you, on the finish of the 2014-15 monetary 12 months, a cumulative whole of £14.2 billion had been invested beneath the scheme in roughly 25,000 corporations, for instance.
The coverage has been imitated and copied by numerous European governments since then. However with the UK’s cultural and historic urge for food for threat and funding in belongings past property, EIS has been a boon for tech corporations because the UK tech trade has expanded tremendously.
Whereas not at all times good (many entrepreneurs typically discover hassle with every thing), EIS and SEIS have no less than put quite a lot of seed cash into the tech ecosystem within the years because it first launched. The outcome has meant that many startups get their first break and proceed to draw institutional enterprise capital funding.
An excellent instance of that’s portfolio corporations (PV), which has now closed its second angel fund (which they declare was oversubscribed), the place lots of the angel buyers accomplish that beneath EIS.
This implies the fund may have over £5m to take a position, between £100,000 and £500,000 in checks, in early-stage UK tech corporations, starting from pre-seed to Sequence A. The fund’s focus can be on fintech , insurtech and SaaS.
The second PV angel fund is backed by a number of the UK’s most energetic angels, together with Chris Adelsbach, Will Neale and Michael Pennington, together with the founders of Credit score Kudos, FreeAgent, BrandWatch, Wayve, Passfort, ContentCal, Griffin, Bibliu, Rahko and Fixflo. As well as, a number of companions from different enterprise capital corporations make investments personally, and NED and former CEOs from the likes of John Lewis, AXA and BBC, based on PV.
The brand new fund has made its first three investments, co-investing with Hoxton Ventures in RePlan and Juno, whereas additionally investing in Passionfruit alongside Firstminute Capital, Playfair Capital, FJ Labs and explorers from Accel, Notion and Atomico.
PV makes a lot of its community-driven tradition, with a community of founders, buyers, and others together with PV founders Will Martin and Will Brooks, who created the fund in 2014. It is one thing of an “institutional angel” that leverages a group of LPs and a broader community of buyers and founders. James Pringle, founding father of Pringle Capital and co-host of the driving unicorns podcast, has not too long ago joined PV.
Martin and Brooks say they’ve helped increase funds for greater than 200 seed to Sequence A corporations, together with Tractable, ManyPets, Marshmallow, OLIO, Pensionbee, Attest, Sensible, Ably, and Credit score Kudos, amongst others.
“We’re delighted to have closed our 2nd Angel Fund as we proceed to put money into and help a number of the UK’s main entrepreneurs as they develop. PV has at all times been in regards to the grid and accessibility,” Will Brooks stated in a press release.
Throughout a name, Pringle defined to me how the fund works.
Seed Financing Membership (SFC) is the supplier of financing companies, and all buyers are dedicated to the fund and Portfolio Ventures are managers of discretionary funds which are deployed from a supply of capital contributed by these buyers.
Which means that PV is “like a mini VC, however with angels as an alternative of LP”.
“As an EIS fund, the primary beneficiaries are the individuals. So our fund is sort of distinctive in that we solely have people in our fund, and it is made up of what we take into account to be a number of the greatest angels and founding merchants within the UK,” Brooks informed me.
“So we have actually targeted on high quality. And that is coming from ‘Will and Will’, who based Portfolio Ventures beginning out as a community of angels, doing quite a lot of offers over time since 2014. They have been doing quite a lot of offers with these very energetic angel buyers. And now it is in a fund construction in order that we are able to have entry to sure presents as a result of some presents are very aggressive and solely actually accessible to funds. So [our angel investors] profit from going via a sort of background mannequin.”
He additionally added that that is the primary fund of greater than £5m, which signifies that PV “can generate inflows of sometimes round £250,000. So in a lot of the offers that we’re doing, we’re third within the cap desk.”
At a time of macroeconomic recession, it seems that Portfolio Ventures’ second fund arrived simply in time to faucet into ongoing innovation throughout the UK.