EIS Industry Report 2019/20

4 5 OPENING STATEMENT REPORT OVERVIEW A WORD FROM DIRECTOR GENERAL, EISA ACKNOWLEDGEMENTS AND THANKS I’m always grateful for the launch of the annual EIS Industry Report as it provides me with an opportunity to look back over the year and reflect upon the current state of the EIS nation. What’s clear is that this year seems to have been one of transition. Nowhere is this more evident than in the case of the sectors where EIS money is now invested. Infrastructure, Media and Entertainment, traditionally hotbeds of EIS investment, have seen significant cutbacks. Technology is the new investment league leader. In the wider VC world, fintech alone saw 10% of all VC deals in 2018. And this has created a whole new lexicon for EIS: it’s goodbye to terms such as asset backed and capital preservation and hello to innovation and growth. So, a big thanks to: Andrew Aldridge, Mark Brownridge, Chris Clarke, John Davies, Kevin Wilks, Richard Meats, Neal Pearson, Nicholas Toubkin, Hannah Skingle, Adrian Walton and Reuben Wilcock. Their input is invaluable, but needless to say, any errors or omissions are down to us. We have relied upon MICAP for most of the data that we have based the report upon. MICAP is part of the same group of companies as Intelligent Partnership. We also carried out our own extensive desk research by examining brochures, investment prospectuses, mystery shopping providers, and trawling through the websites to verify their data. The report is made possible by our sponsors, who have contributed copy to the report and supported us by helping to meet production and printing costs. So, a big thanks to Blackfinch Investments, Deepbridge Capital and Seneca Partners. Mark Brownridge Director General, EISA We couldn’t do this without the help and support of a number of third parties who have contributed to writing this report. Their contributions range from inputting into the scope, sharing data, giving us their insights on the market, providing copy, and peer reviewing drafts. As a result, more and more entrants are launching EIS and SEIS funds to the market, giving investors and advisers greater choice than ever before over who they should invest their money with. Many of those new entrants are long established, serious players in the VC market and who by launching EIS and SEIS funds hope to knit together their funding journey at the earlier stages of investment with their existing later stage funds or vice versa. This gives the EIS industry significant breadth, depth and diversity. Importantly, EIS is now viewed by such VCs as the champion of the early stage entrepreneur, injecting much needed equity finance into those companies with the greatest potential and strongest ambition. For advisers and financial planners, this has brought transparency and scrutiny into much sharper focus. Charges, performance and governance are all under the spotlight more than ever as funds vie for investment from their clients. This is good news for advisers and financial planners as funds become leaner, meaner and much more aligned with the needs of both the investee company and the investor. Increasingly it will be those EIS and SEIS funds who are prepared to be as transparent as possible about their proposition who are the beneficiaries of the very highest levels of inward investment. Advisers and financial planners have been more inquisitive than ever about getting under the bonnet of their clients’ EIS and SEIS investments and it’s been great to see so many EIS and SEIS fund managers recognise this and take up the challenge. This is all part of the education process of truly understanding how EIS and SEIS investments work, which can only be in everyone’s interests. Fortunately, in the Industry Report from Intelligent Partnership we have an important tool in the move to greater transparency. The report delivers its usual mix of information, education and insight and I wholeheartedly recommend you put the kettle on, find a comfy chair and read it from cover to cover. Your clients will thank you for it! Learning objectives for CPD Accreditation By the end of the report readers will be able to: Identify the main developments and news in the EIS market in 2019. Understand the developing impact of rule changes to EIS. Be aware of the key strengths, weaknesses, opportunities and threats in the EIS market. Describe recent changes to key EIS metrics, such as typical fees and underlying investment sectors. Recognise how the adviser community is currently interacting with EIS and its areas of confidence and concern. Be able to benchmark current products and providers against each other on key investment criteria. “More and more entrants are launching SEIS and EIS funds.”