EIS Industry Report 2018/19

30 31 Software as a Service (SaaS) Software as a Service (SaaS) refers to an alternative way of accessing and using software. The traditional software model had users purchase software outright and load it onto their devices. However, SaaS is based on a subscription model where the software is hosted in the cloud. The exponential advances in internet speeds over the past decade have made this approach possible. In recent years, SaaS has grown significantly as an industry. Many EIS technology managers are focusing on SaaS as they believe this approach presents a solid investment case. SaaS projects are often easily scalable, and can be quicker to generate profit. Sometimes, these projects can deliver rapid revenue growth and achieve exits with strong returns to investors. In contrast, investing in hardware projects can require a greater time horizon, with a greater amount of R&D involved. Although potentially lucrative, the SaaS market is crowded. Like any software venture, the application will have to present a USP. On this basis, there is a notable risk factor with SaaS investment. Fintech The UK has been a hub for Fintech innovation. This is no surprise as London remains a global centre of the financial services industry. EIS managers have certainly integrated this sub-sector into their investment focus. Some of the key focuses have included insurance and wealth management technology. Investment Manager: Mercia EIS Fund Intelligent Positioning’s SaaS analytics platform provides real-time analysis of a brand’s search performance, market intelligence about competitors’ market presence and industry-wide trends through its Pi Datametrics product suite. The company has a strong client base in retail (Harrods, SuperDry, Tesco, Debenhams, Clarks and Waterstones), online media (Condé Nast, Time Inc), gaming, financial services, telecoms and travel. 28 Investment Manager: Downing Ventures EIS hackajob is an online recruitment platform that connects technical candidates (software engineers and developers) directly with employers. Prospective employees complete coding assessments tailored to each technical role, with the top applicants sent through to the employers for interview. This provides companies looking to recruit with more efficient, targeted access to better talent. hackajob has worked with large clients, such as Apple, Sky Scanner and Argos, to hire software engineers and developers. The business has received two funding rounds via Downing Ventures EIS. 29 Investment Manager: Oxford Capital EIS Moneybox’s smartphone app allows consumers to select and manage savings and investment products. Users can meet their saving goals through one-off investments, regular direct debit payments, or a ‘keep the change’ concept, where everyday spending is rounded up to create a balance that can be automatically saved. Investment Manager: MMC Ventures EIS Fund Interactive Investor is a fintech platform that offers low-cost trading and investment to retail investors. In 2017 Interactive Investor acquired TD Bank Group’s European direct investing business and has over £21bn of assets under administration. The company’s 300,000 customers can trade in nine currencies in 32 countries. EXAMPLES OF EIS SAAS INVESTMENTS: EXAMPLES OF CURRENT FINTECH INVESTMENTS: "Too much money is going into London's start-ups, whereas as we find well-priced, great technology companies in the UK's regions." — DR MARK PAYTON, CEO, MERCIA TECHNOLOGIES PLC Market Update / Top Investment Sectors Market Update / Top Investment Sectors