EIS Industry Report 2019/20

36 37 MARKET RESEARCH EXITS 2011-2019 Amount of companies that received fundraisings Amount of these companies that have now exited (via IPO or acquisition) 40,000 30,000 20,000 10,000 0 A yearly breakdown of the figures for EIS gives a good indication of the lifespan of the investment. Advisers and managers often refer to an investment horizon of seven to ten years, rather than the three- year minimum to qualify for income tax relief. The chart tracking the number of exits for companies that raised an ”EIS likely” round from 2011 onwards demonstrates this longer term view, as an increasing number of exits are seen as the years progress. Compared to the number of companies receiving fundraising, the number of investments that have now exited, either via IPO or acquisition, is only a small percentage - around the 5% mark for EIS, SEIS and KICs. These figures underline the long-term nature of such investments - although it should be borne in mind that EIS investments from 2016 onwards would not yet have reached the three-year threshold to qualify for income tax relief. 2011 2012 NO. OF IPOS AND NO. OF ACQUISITIONS IPOS ACQUISITIONS 200 250 150 100 50 0 2013 2014 2015 2016 2017 2018 H1 2019 “Working with sector experts should provide investors with the reassurance that the investment manager can provide support to investee companies beyond providing cash.” — ANDREW ALDRIDGE, PARTNER, DEEPBRIDGE CAPITAL Considerations for Investment / Deal Flow