Venrex is a London-based, FCA regulated, venture capital firm, with a strong 12 year track record of early stage investments in fast-growing businesses including: Just-Eat, Notonthehighstreet.com, Orlebar Brown, Chilango, Charlotte Tilbury, Dressipi, Thread, Loveknitting, Opus Energy, Skimlinks and Lyst.
Venrex takes a targeted, ‘hit driven’ approach to early stage venture investing, focusing only on opportunities which the team believe can deliver a minimum 10X return – we will have negative outcomes so we need to think that the successes can get big.
Traditionally, venture capital funds have required high minimum investments, making them inaccessible to most investors. This means that access to these opportunities is in reality often limited to closed private networks, family offices, and high net worth individuals. We have successfully raised six investment vehicles this way, with average net realised and unrealised returns to date of over 20% IRR calculated over the past 12 years. All estimated IRR returns have been calculated using the most recent valuation of the companies based on the BVCA method of calculating fair value. In addition, we have had a valuation review undertaken by a 3rd party accountancy firm who provided a review of the valuations used as the basis of such estimated IRR, and who concluded that such valuation bases were reasonable and, in their opinion, consistent with the IPEVC valuation guidelines.
We are very pleased to be opening up access to our seventh fund, the Venrex VII EIS Fund (“the Fund”). We are seeking to democratise venture capital, allowing the crowd to invest through the Fund alongside institutional and high net worth investors.This is an opportunity to invest in the next cohort of ambitious startup and early stage businesses selected by Venrex.
By investing in the Fund, you can now get access to a portfolio of early stage investments selected and supported by a highly experienced team, with a track record of identifying, selecting and managing investments in popular high street and online brands.
We are NOT guaranteeing that all investments will be able to benefit from EIS relief but given the stage that we invest and our UK focus we are hopeful that the majority will be. We are primarily a Venture Fund but we are structured to get the benefit of EIS relief where appropriate. For example, in our 2014 EIS Fund, nine out of the twelve investments were eligible for EIS relief at the time of investment.
By investing in the Fund through Seedrs, each investor will be diversified across the cohort of companies, with the chance to benefit from our proven ability to date to discover and negotiate exciting opportunities, and to mentor entrepreneurs post-funding.
WHAT WE LOOK FOR
Since January 2003 Venrex has invested £26 million into 54 businesses on behalf of its partners and other investors. Collectively, the realised and unrealised net return (i.e. based on current valuations of those we have not yet sold) has been an estimated £59.5 million at an approximate net IRR of over 20% calculated over the past 12 years. Again such valuations have been estimated in accordance with the BVCA method and have been independently investigated as mentioned above. This does not account for the advantageous tax reliefs under the Enterprise Investment Scheme (EIS) for eligible investments.
In a typical year, we estimate we review more than 300 investment opportunities referred to us from our exclusive network of venture capital, firms, investors, entrepreneurs, advisors and friends which we’ve built up over the last 12 years. Of these, we aim to meet with, and then assess, around 100 where we look for a combination of the following:
• Large, or potentially large, and growing market niches
• A founder who can sell, convince, knows their market inside out, is commercially hungry or is technically strong and compelling
• Working in an industry with high barriers to entry to other new entrants
• Intellectual property value, strong technical skills, strong brand
• Low capital intensity with minimal physical stock and few physical outlets
• A high Net Promoter Score
• Limited exposure to political, legislative or commodity risk
Of the businesses we see and assess, less than 5% make it through to final due diligence and, ultimately, investment.
USE OF CAPITAL
Venrex expects to make approximately 6 investments using the funds raised (dependent on the total size of fund and seeing enough businesses that meet our criteria). Where the business is EIS eligible, each investor in the Fund (depending on their circumstances) will be able to receive EIS relief on these investment made by the Fund.By investing in the Venrex Fund, each investor will be automatically diversified within the portfolio of investments made, benefiting from Venrex’s ability to discover and negotiate exciting opportunities.
It is anticipated that all funds will be invested in the current tax year 2015-16.
Seedrs’ Investors’ funds will be held in escrow by Seedrs until the businesses are selected by Venrex. Seedrs acting as nominee will then invest directly in each company in exchange for the equity, subject to their strict legal due diligence. Seedrs will then hold your shares as nominee (in the same way that it does for all startups that raise money through its platform).
PLEASE NOTE THAT THE FEES CHARGED ON THIS FUND ARE DIFFERENT FROM THE NORMAL FEES CHARGED ON OTHER SEEDRS CAMPAIGNS.
There will be a fee of 7.5% charged on the total funds raised, which will be shared between Venrex and Seedrs (this fee is referred to as the “Upfront Fee”). This Upfront Fee will be paid out of the total funds raised first and will be instead of our normal fee that we charge to a company that receives investment on Seedrs. Then, the remaining balance of 92.5% of the funds raised will be invested in the relevant companies chosen for investment.
Venrex will also earn a performance incentive fee of 12.5% on any profit made on a fund wide basis. Seedrs will charge their standard 7.5% fee on any profits made by investors on each individual investment in the fund.