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Investment: Vala Capital EIS fund
Aim: Generalist fund with a unique fee structure
Tell us about the fund
Vala Capital is a UK venture capital firm founded by seasoned entrepreneurs and venture capital investors Jasper Smith, Arthur Hughes and Paddy Willis. Along with Boyd Carson of Sapphire Capital, they represent the investment committee, responsible for identifying the prospective investee companies and mentoring them through to exit.
Smith, Hughes and Willis cumulatively have a track record in venture capital investments of more than 30 exits, with an aggregated return of 3x.
The Vala EIS Fund intends to invest in a portfolio of six to 10 EIS qualifying companies and expects to deploy clients’ capital every quarter, including expecting a full deployment of capital before the end of the 2018/19 tax year (allowing full carry back of income tax relief to 2017/18).
It is anticipated that most of an investor’s capital will be invested in to companies that have previously been invested in to by the fund. Equally, it is expected that most of the capital will be in to companies that are already achieving revenues.
Vala has a unique fee structure that does not charge initial fees, annual management or administrative charges, audit contributions or custodian costs. Instead, the company charges an initial fee of 6% of the investment to the investee company and to the investor, 20% of profitable exits.
[Vala Capital is an appointed representative of Sapphire Capital Partners LLP, which is authorised and regulated by the Financial Conduct Authority].
How much is being raised?
£10 million in the tax year 2018/19 but with capacity to deploy more.
What types of investments are being sought?
Although the Vala EIS portfolio is a generalist fund, the investment team each brings deep sector expertise across a number of sectors, having conceptualised, started, invested, mentored and exited multiple companies in these sectors. it is expected therefore that most investments will come from: technology – in particular fintech, media and entertainment, food and beverage, and engineering.
What is the minimum investment?
There is no maximum but the minimum investment is £25,000.
What is the targeted return?
The fund is targeting a 2x return when all the companies in the client’s portfolio have exited. This is excluding tax relief but is after fees.
For a minimum investment of £25,000 (assuming no adviser fees have been facilitated), we target a return of £50,000 to the investor, excluding the £7,500 available income tax relief.
Provide details of the top three fund holdings:
Arksen – a unique and innovative range of semi-autonomous explorer vessels. Think Land Rover of the sea, with all the tech of a Tesla. This company launched the range at the Dusseldorf Boat Show in January 2019, garnering considerable interest, including 25 active customer engagements. The next phase of the business is the production of the full-size prototype.
Great British Biscotti Co – a scaled-up bakery business making a range of sweet and savoury biscotti biscuits. It is a fast-growing wholesale and food service, with customers including multiple major supermarkets. 250% revenue growth in the 2017 year and expected further rapid growth in 2018. Further funding is allowing further expansion of the production capacity to fulfil orders for the major supermarkets.
Play.Works – develops games for playing on instant messaging platforms on smartphones or through hardware such as smart TVs. Sales rose to £1.8 million in 2018, from £1.2 million in 2017 and achieved profitability. It currently has a portfolio of more than 400 games and the next investment will support the development of further games and investment across other platforms.