GBI Magazine caught up with Glen Stewart, Head of Intermediated Capital Raising at Committed Capital, to find out more about the company’s strategic and operational signature.
Glen is a tax adviser and previously worked at Coopers & Lybrand, PwC and Deloitte specialising in HNW, Expatriate tax and cross border advice. Glen has 14 years’ experience raising capital for businesses in partnership with financial advisers and accountants, utilising tax efficient investment wrappers such as EIS and VCT.
What has been your firm’s approach in 2019 and what about 2020?
The rule changes brought about by the Patient Capital Review (PCR) aligned perfectly with our growth investment strategy, which we will continue into 2020.
Operationally, we continue to grow the team to meet increased interest in our EIS Fund from financial advisers looking for fund managers with an existing track record in the growth space.
What’s your firm’s USP?
Our track record. We put this down to the depth and breadth of our rigorous due diligence process and the emphasis we place on human capital. Since 2001, we have made multiple investment rounds across 33 EIS qualifying companies, achieved 19 exits and 2 partial exits, with just 1 partial failure. We delivered an average 2.35xROI. (excluding tax reliefs) against a target return of 2-3x ROI.
The importance of human capital cannot be underestimated. A company can have a world class product or service, first mover advantage and distinct USPs – but without a cohesive management team and a clearly defined sales and marketing strategy, the company will not achieve its potential.
Has your firm changed in any way during the year?
We have invested significantly in our back-office infrastructure and client facing investor portal, having adopted the Exact Libris software.
We are structuring a non-EIS qualifying LLP fund with a £100m target fundraise aimed at institutional and HNW investors. This will provide follow-on investment for investee companies which have outgrown the EIS framework, and new non EIS-qualifying investee companies.
The UK has a strong start-up/entrepreneurial culture – what do you put that down to?
Connectivity and access to a wide range of finance options. Entrepreneurs are more networked than ever before, with an abundant choice of accelerators and incubators providing support, space and resources. We have a supportive government offering several funding routes for startups and growth stage companies.
There is also the availability of R&D tax credits, finance secured through SEIS, VCT and EIS funding options, crowdfunding and peer-to-peer lending – all helping entrepreneurs turn their vision into reality.
What are your views on the government’s recent changes to EIS?
The PCR brought about welcome changes that realigned the legislation with the purpose for which it was originally intended. Following this review, it would be beneficial for investors, advisers and fund managers alike to have a period of legislative stability without further change.
What changes to the schemes would you suggest?
It would be great to see tax incentives reintroduced for established companies investing into growth stage companies by way of the Corporate Venturing Scheme (CVS) that expired in March 2010. CVS was very similar to EIS, albeit the tax breaks were less.
What sectors do you specialise in and why?
Since 2001, we have focused on growth-stage UK-based technology companies that are post revenue (£1m+). It is an important and growing sector because tech is part of our everyday lives and comprises many sub-sectors. According to the 2019 Tech Nation report, total venture capital investment in UK tech in 2018 topped £6bn, more than any other European country.
Are more clients becoming interested in the schemes?
From our own perspective, this is certainly the case with an ongoing year on year increase in FUM. According to HMRC statistics released in May, in 2017-18 a total of £1,929 million was raised under EIS vs £1,901 million in 2016-17.
Changes to pension annual and lifetime limits, a volatile stock market, sustained low interest rates and increased promotion of EIS investment opportunities continue to increase client interest.
How can advisers continue to educate clients about the investment opportunities in EIS?
There are a number of insightful resources that can assist advisers educating clients about EIS opportunities, such as the EIS Association and Intelligent Partnership. EIS can be a complex area and advisers can also tap into the knowledge of Fund Managers when considering the interaction of the generous tax reliefs available, investment opportunities and specific client cases.
Are there any clouds on the horizon?
With the UK’s strong entrepreneurial culture, we continue to see innovation and very strong deal flow.
We anticipate demand for investment to increase with interest rate rises and access to more traditional bank finance still scarce. For the foreseeable future, we expect it to be “business as usual”.