The Par Syndicate EIS Fund is a discretionary portfolio service, which will provide a portfolio of investments in unquoted technology companies. The manager highlights that it is providing genuine risk capital. The benchmark is an average annualised IRR of 15%, equivalent to doubling capital over a five-year period. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. The Fund is evergreen.
Why invest
Positives
Strategy: Exposure to a small portfolio of technology companies co-investing with Business Angels.Issues
Issues
Track record: Only a small number of exits to date, mostly predating the EIS fund, but the results so far look promising.
The Investment Manager
Positives
Team: Diverse range of experience in team, with clear strategy and good support from its Angel network.
Issues
Company size: The team is small, and this may act as a slight constraint, although it has recently expanded and has plans to recruit further.
Nuts & bolts
Duration: The Fund is evergreen, with closings around financial year-end or when sufficient investments are made.
Diversification: The manager expects to provide at least seven equal investments for each closing.
Valuation: Usually changes at next financing or on write-down.
Specific issues
Fees: Combination of direct fees and company charges. Four years of annual fees are deducted upfront.
Performance fee: Charged at 20% on aggregate returns over 120% of subscription, but threshold increased by 40% if exit within three years.
Risks
Target returns: The benchmark average IRR of 15% (roughly doubling the gross investment in five years) suggests a medium- to high-risk investment strategy.
Companies: Supplying risk capital to early-stage technology companies at the start of commercialisation. There will be a spread of company returns as the successful ones will do very well, but those who fail may do so completely.
