The fund’s investment strategy is to invest in a diverse portfolio of EIS Qualifying companies, with an option to include SEIS, in selected technology areas in which Mercia has specialist knowledge.

Why Invest

Positives

Strategy: Exposure to a portfolio of technology companies across four sectors.

Issues

Track record:  Only a small number of exits to date, but the unrealised figures so far look promising.

 

The Investment Manager

Positives

Team:  A large, widely experienced team, with a clear strategy and sector specialisms.

Issues

Managing growth: Funds have been growing quickly, and care will be needed to manage team and systems growth alongside this.

 

Nuts & Bolts

  • Duration: The fund will have at least two tranche closings per year, in Q2 and Q4.
  • Diversification: The Manager expects to provide 15 EIS investments in the fund, spread across its four technology sectors, with up to 5 SEIS investments (subject to capacity).
  • Valuation: Reviewed every quarter. Investors will have ongoing access to information through Mercia’s client portal.

 

Specific Issues

  • Fees: Combination of direct fees and company charges.
  • Performance fee: Charged on a portfolio basis at 20% for returns over £1.

 

Risks

  • Target returns: The target return of tripling capital suggests a 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 investments will do very well, but those that fail may do so completely.