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A new ‘institutional angel’ fund is an example of the UK’s continued ability to innovate in venture capital

The UK’s Enterprise Investment Scheme has been a driving force for startups in the UK, as it has allowed angel investors to invest in a very tax-efficient way.

Launched in 1994, it was designed to encourage investment in small unlisted companies. As Wikipedia will tell you, by the end of the 2014-2015 tax year, a cumulative total of £14.2 billion had been invested under the scheme in around 25,000 companies, for example.

The policy has been imitated and copied by several European governments since. But with the UK’s cultural and historical appetite for risk and investing in assets beyond ownership, EIS has been a boon for tech companies as the tech industry in the UK has is considerably developed.

While they’re not always perfect — many entrepreneurs sometimes find trouble with all of this — EIS and SEIS have at least invested a lot of seed money into the tech ecosystem years since its launch. The result allowed many startups to take their first break and attract institutional venture capital investment.

A good example of this is Portfolio Ventures (PV), which has now closed its second angel fund (which they believe was oversubscribed), where many angel investors are doing so under EIS.

This means the fund will have over £5m to invest, between £100,000 and £500,000, in early-stage UK tech companies, ranging from pre-seed to Series A. The fund will focus on fintech, insurtech and SaaS.

The second PV angel fund is backed by some of the UK’s most active angels, including Chris Adelsbach, Will Neale and Michael Pennington, alongside the founders of Credit Kudos, FreeAgent, BrandWatch, Wayve, Passfort, ContentCal, Griffin, Bibliu , Rahko and Fixflo. In addition, a number of partners from other venture capital firms are personally investing, as well as NEDs and former CEOs like John Lewis, AXA and BBC, according to PV.

The new fund has made its first three investments, co-investing with Hoxton Ventures in RePlan and Juno, while also investing in Passionfruit alongside Firstminute Capital, Playfair Capital, FJ Labs and scouts Accel, Notion and Atomico.

PV does much of its community culture, with a network of founders, investors and others alongside PV founders Will Martin and Will Brooks who established the fund in 2014. It’s kind of a “ institutional angel” which relies on an LP community and an extended network of investors and founders. James Pringle, founder of Pringle Capital and co-host of the Riding Unicorns podcast, recently joined PV.

Martin and Brooks claim to have helped raise funds for more than 200 companies from seed to Series A, including Tractable, ManyPets, Marshmallow, OLIO, Pensionbee, Attest, Smart, Ably and Credit Kudos, among others.

“We are delighted to have closed our second angel fund as we continue to invest in and support some of the UK’s leading entrepreneurs as they scale. PV has always been about network and accessibility” , Will Brooks said in a statement.

During a call, Pringle explained to me how the fund works.

Starting Funding Club (SFC) is the funding service provider, and all investors commit to the fund and Portfolio Ventures are discretionary fund managers deploying from a pool of capital contributed by these investors.

This means that PV is “like a mini VC, but with angels instead of LP”.

“As an EIS fund, the main beneficiaries are individuals. So our fund is quite unique in that we only have individuals in our fund, and it’s made up of what we consider to be some of the best angel founders and operators in the UK,” m’ Brooks said.

“So we focused on quality. And that comes from ‘Will and Will’, who founded Portfolio Ventures as an angel investor network, doing many deals over the years since 2014. They’ve done a lot of deals with these very active angel investors. And now it’s in a fund structure so we can get access to certain offers, because some offers are very competitive and really only available for funds. So [our angel investors] benefit from going through some sort of fund model.

He also added that this was the first fund over £5m, meaning PV “can typically make a ticket of around £250,000. So in most transactions we conclude, we occupy approximately the third place on the table of the ceilings.

At a time of macro downturn, it looks like Portfolio Ventures’ second fund has arrived just in time to capitalize on continued innovation across the UK

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