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The Deepbridge Technology Growth EIS is a discretionary managed portfolio service focused on companies with technologies that are at the stage of being commercialised. Funds are invested into a portfolio of three to nine companies, which are in the areas of resource and energy innovation, medical technology and high-growth IT-based solutions. The target return is £1.60 for each £1 invested (gross) over a minimum of three years. There is no income target.

Why Invest

Positives

  • Strategy: Well-defined investment process to invest directly in companies in selected technology areas.

Issues

  • Concentration: Portfolio may be up to nine investments, although smaller investors may get greater concentration.

The Investment Manager

Positives

  • Team:  The Deepbridge team is very experienced in the relevant areas, and its committees have very strong outside members.

Issues

  • Track record: Although the team is experienced, to date, Deepbridge has had only one exit and one partial exit.

Nuts & Bolts

  • Investing: Deployments take place on a monthly basis, so new money will usually be invested within that period.
  • Diversification: Portfolio of between three and nine companies.
  • Valuation: Unprofitable companies will be held at cost or at last relevant transaction. Profitable companies use a discounted average multiple from relevant companies.

Fees

  • Fees: Only the performance fee is not charged directly to the company.
  • Performance fee: Performance fee of 20% on gross returns over £1.20 on a per company basis.

Risks

  • Risk mitigation: Deepbridge aims to mitigate risk by active ongoing support of the companies and choosing conservative business plans. The companies are revenue- generating, but still immature – with the risks that brings.
  • Target return: The target return for the fund is £1.60 for each gross £1 invested over three to four years. Individual companies tend to have much higher targets, reflecting that success in a company will give an excellent return, but there is a real risk of loss in any project.
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