For further information relating to the later stage EIS fund and our Private Growth Capital services, please click on the relevant topics below. If the information you need is not covered below please get in touch, the details are in the ‘Contact us’ section.
Our philosophy is to assign and align our interests with those of all investors, including the company’s other important stakeholders.
Our alignment with investors is perhaps best shown in our success fees which are, by far, oriented towards significant returns rather than mediocre returns.
Our success fee commences at 200% net return to the investors and at this level, represents a 20% carry (industry average is 100% trigger threshold and 20% carry). Our success fees then gradually rise in levels until a 400% net return to our investors is achieved. Net return to investors, in excess of 400% attracts a success fee is 33%. Hence, we only make significant returns on a successful investment.
For the 2018/19 period, we are offering significant incentives to attract early and large individual or IFA consolidated investments.
Raising finance is an expensive process for both the company and for the source of those funds. However, our process provides an organised way in which subsequent finance documentation can be easily updated and assembled, thereby reducing costs for future funding rounds.
The prospective company will cover one-time diligence, legal and all other fees relating to the transaction (usually £1,200-£20,000). At the conclusion of the capital raise, we will be reimbursed for all direct costs incurred in raising the capital, plus up to 3%. Some of these fees we request in warrants to ensure our mutual alignment.
After financing, there are fees to cover non-executive directors and an annual administration fee which reflects the reimbursement of direct fund management costs, plus up to 1.75% of capital raised.
Fees incurred in larger capital transactions are materially paid by the investee company. For companies seeking Private Growth Capital, diligence cost ranges from £12,000 to upwards of £20,000. Fund raising fees range from 4.5% to 6.5% of funds raised based on the size of the transaction. An initial fee of £1500 is also charged for completion of the first level due diligence and assembling meetings with family office investors for larger investments.
The Side by Side Partnership will also request to take a proportion of their fees in warrants, exercisable only on change of control.
After financing, the company will pay directors fees of £3000 to £4000 per meeting, and a monthly monitoring fee starting at £2000 per month. This fee is based on the time required for monitoring and working with the management teams.
We plan to allow a limited secondary market for investors seeking premature withdrawal from the fund due to circumstances previously unforeseen. In these circumstances, the withdrawing equity investors cancel some, or all, of their holding progressively into an investment sidecar in the portfolio company. Non-EIS investors will then be sought to purchase from the sidecar with a discount to the value of the equity from the last round.
It is our intention to allow investors in our fund to co-invest in our portfolio companies in subsequent financing rounds. This investment will commonly carry terms that are different from those of EIS investors, such as next round antidilution clauses and other specific rights relating to the relationship between the founder or CEO and the company of the non EIS investor group.
All capital deployed by the fund can only be returned once the underlying investment is sold, or if there is the possibility of a premature exit through a limited secondary market offering. Investors, however, maintain the option to withdraw their submitted capital prior to it being deployed.
We expect to invest up to 10% of the total value of each fundraise in portfolio companies during the first two years with the company. In addition, we may also co-invest in portfolio companies alongside the fund and in these cases, timing, terms, conditions, and other investment matters will be on terms no better than those offered to our EIS investors.
Should the Side by Side Partnership decide not to co-invest in non-EIS equities as described here, this is not a reflection of diminished expectations of the business in question.