Nexus Investments, a division of Harry Hyman’s Nexus Group, has launched its first EIS Scale-Up Fund which it believes to be the first of its kind since the June announcement of the UK Government’s GBP2.5 billion British Patient Capital programme.
The Fund aims to address a large gap in the market by providing UK investors with access to exciting but curated UK entrepreneur-led private companies that have successfully passed the start-up stage and are ready to scale up on a global basis.
It will focus on four of the most exciting areas of change in the world today where UK early stage companies can become global leaders: Data, Digital, Education and Health.
Nexus Investments has been successfully arranging and managing EIS co-investments deal-by-deal into these sectors for a number of years, with a mixture of smart-money, family offices and industry experts already valuing the chance to co-invest EIS capital into deals where they can (if they wish) spend time with the founders and management prior to and after making an investment. Nexus’ own involvement as investors and advisors re-assures them, and later-stage VC and institutional investors, that the portfolio company founders will be best in class and that things will be “run properly” from an early stage.
An example star-performer is Boclips into which Nexus led the seed investment round in 2014. This education tech business is transforming the use of video in classrooms all over the world, from the USA to Singapore. The overall addressable market for educational materials is an enormous and rapidly growing market (USD58bn in 2016, excluding China where a huge opportunity exists in itself). Boclips was one of Mayor of London Sadiq Khan’s 10 UK tech picks to accompany him on his trade mission to India last year. Boclips is a good example of the “businesses of tomorrow” that Nexus Investments consistently finds and helps to grow and to which smart money investors love to get early access.
Another stand-out company that is scaling up internationally is healthy food brand http://www.soupologie.com, into which Nexus led an investment round in 2015. Food traffic light labels were introduced by the UK Government in summer 2013 to show how much fat, saturated fats, sugar and salt are in food by using the traffic light signals for high (red), medium (amber) and low (green) percentages for each of these ingredients. Soupologie makes products that they believe uniquely score “green” on all the traffic-light indicators on the sides of packs. Soupologie is now shaking up the food industry by selling its healthy products not just in the UK (in Sainsbury’s, Waitrose and others), but now also on French supermarket shelves. The European chilled soup market is the fastest growing soup market in the world and accounted for 45 per cent of the total global chilled soup market in terms of value at end 2017, according to Persistent Market Research.
One characteristic of Nexus Investments companies is that they often manage to attract not only high calibre EIS investment, but also very high calibre boards of directors. Distinguished chairpersons who sit alongside Matthew O’Kane on existing Nexus-backed companies include Mark Wood (formerly Editor in Chief of Reuters, and now Advisory Board member of PwC) and Mike Rusbridge (formerly CEO of Reed Exhibitions PLC, and currently Board Member of the National Exhibition Centre (NEC)).
The Nexus Investments EIS Scale Up Fund will enable a far wider pool of EIS Investors and their financial advisers to learn about and similarly benefit from Nexus’s sector experience, deal pipeline and management expertise, through an EIS fund managed by Nexus Investment Management Ltd.
The Fund is targeting up to £10m with a first completion in September 2018 and evergreen monthly completions thereafter, to invest into 8-10 or more holdings over the coming 1-2 years. The Principals have committed over GBP£250,000 to the Fund.
Matthew O’Kane, Managing Director of Nexus Investments, says: “The Government have identified scaling as the next big policy priority if the UK is to capitalise upon the start-up boom of the past 5-10 years. At the same time, the era of limited life or “asset-backed” EIS Funds has effectively come to an end with the new Risk-To-Capital condition introduced last year. The Government is instead encouraging a shift away from historical safe harbours toward knowledge-intensive, entrepreneur-led companies, in value-add industries”.
Harry Hyman, Founder of Nexus Group, says: “Since the UK Government’s Patient Capital Review, the focus for EIS investment criteria has shifted to high potential, growth investments. This is the area in which we specialise, and have done for some time. We have put our money where our mouth is in our own EIS deals to date. Our Scale-Up Fund is specifically designed to help investors access these top-tier UK investments within a diversified fund portfolio that reduces risk”.
O’Kane adds: “Nexus Investments are already on speed-dial for the very best entrepreneurs looking for high-quality EIS capital from active industry experts who add real value. We think tomorrow’s greatest challenges and therefore biggest opportunities will continue to be seen in the Data, Digital, Education and Health sectors. Our Scale-Up EIS Fund should therefore be of great interest to private investors and their advisors who agree with this analysis and wish to benefit from our deep expertise in growing UK companies to compete internationally in these sectors”.
