Arie Tech LLP (Fund)

Arie Tech LLP / Sapphire Capital Partners LLP EIS Report

21 Sep 2017 / Tax enhanced research

Summary: The fund’s investment strategy is to invest in a portfolio of EIS qualifying technology companies, with a particular emphasis on fintech, mobile applications, big data, the internet of things and medical technology.

Why Invest

Positives

Strategy: Exposure to a portfolio of technology companies using proven technology with an emphasis on B2B areas.

Issues

Past performance: The fund is new and has no past performance, though we note that the team has two exits from other investments.

The Investment Advisor

Positives

Team: Through Arie Capital, they have significant experience of the technology market and an established infrastructure.

Issues

Track record: Although they have extensive experience of alternative investments, including media EIS and a single company tech EIS, this is their first tech EIS fund.

 

Nuts & Bolts

  • Offer period: The first closing date will be 23 March 2018, or earlier if required.
  • Diversification: The aim is to invest in 4 or more companies.
  • Valuation: There will be little or no change in the valuation except at further fundings, and investors will receive regular updates on progress.

 

Specific Issues

  • Fees: Mixture of direct fees and charged via the investee companies.
  • Performance fee: Subject to a threshold of £1.35 for each £1 invested on a per company basis. Above this, the Fund receives 20% of the investor share of the return.

 

Risks

  • Target returns: The target return of doubling invested capital over five years suggests a higher risk strategy within the EIS area and is appropriate for the strategy.
  • Companies: Individual investments will be high risk, with the return profile likely to be skewed. Those that do well will give a larger than target return but the failures may return little or nothing.