How can you rate a Seed EIS investment manager?
Reviewing a Seed EIS investment manager’s track record of professional advisers, investors, or companies looking for funding can be very difficult due to the lack of independent data.
Although there are a number of research groups that the managers analyze, they all tend to look at different elements of the groups and no one keeps track of actual investment returns.
So if a professional advisor or investor is doing their own research, what should they be looking for?
Matthew Cushen, one of the founders of Worth Capital, recognizes the challenge, especially if the advisor is only looking for the number of companies the investment manager has successfully exited.
He says, “SEIS is much younger than EIS, which has been around for over 25 years, and a number of groups can point to realized returns from the exit, either with or without tax breaks. Seed EIS is less than a decade old, and many of the companies we invest in are inherently younger and sometimes have up-front revenues.
“At Worth, we source equity ventures through our Startup Series, where we offer successful businesses up to £ 250,000 in the form of a capital injection. These companies are at all stages of their early life cycle. We tell investors in a portfolio of ten investees that the likelihood is that one or two will fail. But it would be wrong to judge ourselves by our mistakes. I think we should be judged by how we work with the companies that make it, and in that cohort we expect one or two to make it pretty big for investors.
“If you are a company looking to invest in Seed EIS, you should take a look at what we can offer besides capital. In our case, my business partner and I have many years of experience in helping companies build their brands and market proposals. This is important as we meet many companies with good ideas that generate sales and may even be profitable. However, this is not necessarily the same as a company that can grow significantly, which makes it attractive for another company or larger VC investor to invest in. “
One of Nova’s Liverpool-based partners, Andy Davidson, agrees with Mr. Cushen. His company specializes in technology-driven companies and runs an active mentoring program that helps companies build their structure from the bottom up based on where they identify areas that need support.
He says, “Many of us at Nova have software or technology backgrounds and we’ve built and sold companies in the industry so we could understand the challenges firsthand. Often times we come across companies that are little more than an idea – we currently have one in the health sector that deals with cleanliness – but we can help develop and expand that idea so that it becomes a real business. “
Both agree that advisors, investors and company founders should scrutinize the Seed EIS investment manager as carefully as the managers of the investees. They discuss the topics in this short video:
“For a consultant who wants to select a #SEIS investment manager for his own assets or that of his client, what should he look for in these managers?” Hear responses from Matthew Cushen, @WorthCapital & Andy Davidson, @WeAreNovaUK https://t.co/BhHUZVEQaM
– Small Business (@smallbusinessuk) January 14, 2021
Are you interested in participating?
The start-up series, hosted by smallbusiness.co.uk and Worth Capital, offers companies the opportunity to secure an equity stake of £ 150,000 to £ 250,000 each month. To learn more, click here.