How do early stage innovative companies get the funding they need?
It’s not easy, but here at Lupton Fawcett we have found some answers through the work we do in advising SEIS (Seed Enterprise Investment Scheme) and EIS Funds. Thanks to attractive tax incentives, these funds are proving to be attractive to investors who have both an appetite for risk and tax liabilities to mitigate.
As an example, the Innovation and Technology Team here at Lupton Fawcett has acted for the Velocity SEIS Consumer Technology Fund since its inception in late 2015. Since that time the Fund has invested in 10 companies including:
- Snatch, a game that uses GPS/GEO location to place mystery parcels on to participant smartphones
- AURIS Tech which uses proprietary interactive automatic speech recognition software to encourage and teach children to reach English via "listening books"
- ITAR, a digital guitar that can be used with tablets and smartphones; and
- Pixsee, technology that can tell the subject matter of a respective image or video and categorise it into highly granular IAB-advertising based categories.
The Founders of the Velocity SEIS Fund are in the process of setting up a sister EIS Fund to provide follow-up investment and also to invest in new opportunities at a higher level. The Fund has usually been a lead investor but in a number of cases has co-invested with other funds, angel investors as well as the founders of the investee businesses.
Young companies often have a lot of demands on limited cash resources. To help with this Lupton Fawcett offers to provide discounted advice to investee companies in their first year as members of the Velocity portfolio. We have done this for Snatch, advising on commercial contracts and a further funding round which has brought in new shareholders including Unilever Ventures.
Our team also advised on establishing the Oxford Technology and Innovations EIS Fund, which typically invests amounts up to £1,000,000 in, primarily, spin-outs from the University of Oxford. Investee companies include Oxford Photovoltaics. Oxford Nanoimaging, Jupiter Diagnostics and Oxtec. The fund has already exited from one investment after Oxitec, a biotech company specialising in genetically modified insects for pest control, was acquired by US Corporation Intrexon.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.