M AGAZINE

EIS ROUND TABLE

LONDON
 BUSINESS RELIEF PRODUCTS
The truth about what’s underneath

Please contact Vilma Pabilionyte to receive a free copy of this guide:

vp@hardmanandco.com / 0207 194 7622
 Round Table

PARTICIPANTS
Dominic Perks Nicholas Baker
Co-Founder Partner
Hambro Perks Baker Jenness Financial Management
E: Dominic@hambroperks.com T: 07941 005829
E: Bakerjenness@aol.com

Nicholas Sharp Ollie Povey

CIO Co-founder and COO, Tempo
Hambro Perks Co-Investment EIS Fund E: ollie@heytempo.com
E: Nicholass@hambroperks.com T: +44 (0)208 634 7137
W: www.heytempo.com

Adam Francis Richard Angus

Mattioli Woods plc Hardman & Co, Head of Business Development
T: +44 (0)1638 564230 T: +44 (0)207 194 7622
E: adam.francis@mattioliwoods.com E: ra@hardmanandco.com
W: www.mattioliwoods.com W: www.hardmanandco.com

Andrew Aldridge Roger Tull

Partner, Head of Marketing Independent Financial Adviser, Positive Solutions
T: +44 (0)1244 746000 T: +44 (0)1702 482021
E: Andrew.aldridge@deepbridgecapital.com M: 07780 666782
W: www.rogertull.co.uk

Henry Hall Stephen Jones

Founder Clear Solutions Wealth & Tax Management Ltd
HH Kollective T: +44 (0)1283 730080
E: Henry@henrykhall.com W: www.clearsolutionsifa.co.uk

Jack Curzon Dr. Rajiv Mathur

Consulting Director CTO and Director
Thomsons Online Benefits Chainvine Ltd
E: Jack.curzon@thomsons.com W: www.chainvine.com

GB Investment Magazine · November 2019 3

 25 YEARS ON,
WHERE DOES
THE EIS MARKET
STAND?
On June 6th, 12 delegates with varying backgrounds but a
common interest in discussing EIS with their peers gathered in the
magnificent Victorian atrium at Hambro Perks in Westminster.

T
he round table discussion was chaired
by Richard Angus, Head of Business
Development at Hardman & Co, the
independent investment research firm,
alongside Alex Sullivan, Managing Partner of IFA
Magazine.
After a brief round table welcome and introductions
Richard posed the first question of the discussion,
asking after 25 successful years “where does the
table think that the EIS market stands now?”
Andrew Aldridge, Partner and Head of Marketing
at Deepbridge remarked that “the EIS market has
never been in ruder health than it is now. It is now
established and we recently saw the statistics from
2017/18, which was a record year for EIS fundraising.
There is big money staying in EIS and the prospects
are excellent.”
DO PEOPLE GET EIS?
But of course, there are still issues the EIS market
needs to address and it was felt that as a slight step
aside from standard investment, there is pressure from
Prudential Regulation Authority (PRA) industries on
‘outside the box’ ideas. Everybody recognises that EIS
is a complicated product, but it can be, and needs to
be, simpler to communicate. Correctly, the regulatory
stance is that it is a high-risk investment, but it needs
to be more specific about high risk so advisers can
explain it more clearly.
EIS is still seen as niche, but perhaps not as niche as it
was. Some delegates felt the perception among IFAs
is that the tax benefits tail is wagging the investment
dog, and there aren’t a huge number of mainstream
clients who are interested. As Nick Baker, IFA at
Positive Solutions in Sussex put it:

4 GB Investment Magazine · November 2019


“There is not enough information for us as advisers to
be able to confidently say to a client ‘it starts here, this
is what happens, and it ends here’, which is what most
people like and can easily understand. Instead you
have to say it might be 3, 5 or 7 years. I know it is a tax
issue, but they are looking at it as an investment. If you
can’t give a defined termination, standard investors
will say, ‘Then I’m not interested - what else is there?’”
WHERE ARE THE OPPORTUNITIES?
So, if EIS is outside the compass of the ordinary investor,
where is the capital funding going to come from?
Richard Angus observed: “We have talked to the
biggest wealth managers in the country and there is
a concern that if the advisers aren’t informed on EIS
some opportunities could get lost in translation – no
adviser wants to give a bad sales pitch. We think the 55-
65 year old bracket of current or ex-businesspeople, if
made more aware, would be very interested in putting
capital in this area.”
Aldridge agreed, saying: “In any walk of life there are
the good and the not-so-good. Any adviser who has
worked in this space and knows it well can have an
eloquent conversation with clients.
“For many advisers, particularly if they have clients
who are business owners, the CGT could be the
initial trigger point for considering EIS, rather than
income tax relief. If the client wishes to sell their
business or property portfolio, they may say ‘What
could I do about tax liability?’ The CGT is a huge lump
sum – it can be the spur to advisers to investigate EIS.
Clients who are selling their businesses are called to
this market. They trigger the adviser interest.”
Roger Tull, IFA at Positive Solutions believes the
secret is to “Anticipate the demand. I have clients who
have property deals happening in a few years who
know nothing about EIS now. I will start an education
process now. If we know the clients well enough,
we know if they are planning to exit the business or
having a life change and that they could be brought
into the market.”
SMOOTHING THE PATH
Angus posed the question, “When you are marketing,
is life getting easier? Are you understood by advisers or
are there obstacles still to be overcome? I talk to people
outside our industry about the nature of investing in
Round Table
entrepreneurs. It does work in the long term if you have
diversified risk. If they don’t have access to capital it
blows up. Is life easier than a year ago? Is knowledge
seeping into the buy side?”
Nicholas Sharp, Head of Co-Investment Fund at
Hambro Perks responded: “I have to be careful because
we’re only a year old – but one thing is clear, there are a
huge number of people who actively want to invest in
early stage businesses.
“The issue is finding investees, with the pitch that
really resonates. We filter 2,000 or 3,000 opportunities
each year. You can be on a distribution list and those
brokers only pay if money ends up in the company.
They have no skin in the game. We do and crucially
that shows our interests are aligned. Many businesses
do fail and they want to know it will hurt you as well as
the manager.
“What they want to know is that you will do the work
and that you owe money in that. You will work alongside
them and so raising capital is not a big challenge.”
Andrew Aldridge again: “It’s about ‘what is the
appropriate investment?’ Several years ago, if
appropriate meant EIS then off an adviser might go
to the largest EIS provider in the market - box ticked
job done. That was the status quo and perhaps
consideration wasn’t given to the appropriateness of
the manager or their investment style.
“That attitude has changed. There are a number of
entrants in the market like our peers here today, all
great guys, who understand the VC market and the
intricacies of supporting early-stage companies, and
that is good for the industry. It adds credibility to what
people are investing in.”
At this point the chair called for a short break,
which meant the Nespresso machine took a caning
and Westminster’s mobile network came under
severe pressure.
Afterwards the discussion ranged widely, taking in
adviser and consumer education, fees, research
resources, investor benefits and some investee
experiences, which we will report in our next articles. GBI
GB Investment Magazine · November 2019 5
 EIS - EDUCATION,
INFORMATION,
SIMPLICITY
Three words kept being repeated during our round table session
kindly hosted by Hambro Perks – ‘transparency’, ‘research’ and
‘education’. All attendees agreed that each of these is vital, and they
unanimously declared that there is still a lot of room for improvement.

THE CHALLENGE OF CHARGES
Stephen Jones, Chartered Financial Planner at Clear
Solutions Wealth and Tax Management, identified
transparency as one of the key issues in the EIS market:
“There is a lot of work about EIS and Hardman & Co.
has provided evidence about the range of charges
and there are different descriptions of charges, which
is leading to transparency with providers.
“Most people don’t understand the range of charges
and how to analyse them. There is the personal issue
with carrying interest and people are quiet about it.”
Andrew Aldridge of Deepbridge totally agreed:
“There is a range of fees and a range of terminology
of fees – it’s an ongoing industry discussion. There is
a myriad of providers who are disclosing what they
charge investors, but perhaps not what they charge
investee companies.
“Charges to investee companies is not simply
comparing apples with apples; there is a difference
between smart capital and dumb capital. Is it passive
capital or is the company getting added value from
the manager?”
He went on to explain the difficulties of trying
to compare like with like, even when looking at
his peers. Transparency and disclosure are issues that
we advocate and that everybody in our sector needs
to take on board. On the plus side, he said the situation
was a lot better than even just a few years ago when
trying to unravel what exactly was being charged was
like trying to tackle the Gordian knot without a sword.
Nick Sharp outlined the Hambro Perks approach: “Our
view is that if we are working for our investors, they
should pay our fee. It is easy to have a market proposition.
These are small growing companies which need money
– if you take out 10%, you aren’t doing them any favours
nor, ultimately, are you helping investors. That is an
absolute no-no.”
He expanded on how they will charge investors those
fees while providing capital to the companies to allow
them to grow. Some paid fees he finds surprising; he
has co-invested with other funds and on the investment
documents they are investing at a different price to
provide money back to the fund manager.
“If we pay 9p and they are at 10p that’s just not on.”
RESEARCH RULES
Replying to a question about how quickly was it
possible to judge that a client was suited to an EIS
investment and to select the right product, Roger Tull,

6 GB Investment Magazine · November 2019


IFA at Positive Solutions reckoned it was easier now
than it used to be.
“If you go back, all you did was get half a dozen
prospectuses that were 30 or 40 pages long. How do
you make sense of that? The emergence of platforms
is a big help to us in terms of assessing what is the
market. It’s healthier now.”
Nick Baker of Baker Jenness Financial Management
highlighted the importance of decent research: “It’s
hard to find – I had to badger Octopus for it. We rely
on quality research. Internal research and product
information is great, but we all know it is not enough.
Having the independent analysis alongside gave me
the impartial point of view so, here is more history and
more information on what we are getting involved
with, for ourselves and for our clients.’”
Jack Curzon, Consulting Director of Thomsons Online
Benefits suggested that while research can be very
useful, sometimes “opinionated experts are easier
for people to digest. Often research is too advisory
when it’s an expert opinion you’re after. There can be
too much caution and hesitation when you read the
research; the stuff people really want and need to
hear often doesn’t come through.”
Financial Planner Stephen Jones added that this is
where the analyst adds value, because it’s essential
you have time to do due diligence. “I would expect
to see a report, so I can take a view on the area of
investment. Years ago, sitting down to try and find out
about something was very different. Today, the track
record is about the people at the top. If they aren’t
impeccable, I’m not interested.”
YOU CAN TEACH AN OLD DOG NEW TRICKS
Chair Richard Angus, Head of Business Development at
Hardman & Co., asked Andrew Aldridge of Deepbridge
how, in view of their success in the EIS market, they felt
the landscape is changing.
The answer was pretty unequivocal.
“Our growth over the last 5 years is down to education.
If you see us speak at an event, we aren’t doing a
hard pitch about our product. It’s about educating
advisers and investors about the changing world of
EIS. It’s about the Patient Capital Review, supporting
innovation and job creation. We try to bring it to life.
“One of our most memorable events was about 18
months ago in Glasgow, which we called ‘Investing in
Scotland’. We had invited Scottish investee companies
Round Table
to join us in order to showcase that EIS is not just a
London or Westminster thing, but about creating and
supporting jobs and innovation in their own back yard.”
“It’s that type of education that really benefits advisers
and investors. Tax might be the initial reason to
consider EIS, but when you see the extent to which
EIS investment is a genuine economic driver, advisers
become aware that it’s about going way beyond tax.”
Stephen Jones concurred: “One reason Octopus is
successful is that they have invested in the education
stance. They do seminar after seminar. If you’ve been
educated by them, it will have worked well and of
course, many advisers don’t have that budget and I
do appreciate that there are other parties, but there
needs to be more.”
The nature of an EIS investment has always involved
a degree of exclusivity, but many advisers have clients
who might benefit – without either of them being
aware of it.
“One of my clients, her brother needed care and he
had a £2 million second property which created a
huge CGT issue on its disposal”, recalled Nick Baker.
“I knew a little about EIS then, but it wasn’t easy to go
to a central place such as Synaptic for research. It is
easier to get information now and some advisers are
open to learning more but there is still not enough
education around this product area.”
Adam Francis, Consultant with Mattioli Woods, noted
that “It’s also about changing customer attitudes.
We are investing in long-term growth. Growing 5%
a year with pension, do you want to invest in young
companies? This is long-term money.
“The worry is that one might only look at fantastic
track records and for a client to take that at face value
and assume their money is safe. The underlying
investment is 5 years down the line and they expect
that is what they’ll get so it is important that they
understand diversification to mitigate risk.”
COMING UP NEXT...
Deepbridge Capital and Hambro Perks introduce 2 of
their investee companies , Rajiv Mathur of Chainvine
(blockchain) and Ollie Povey of Tempo (recruitment)
respectively. Both gave a fascinating insight into
the coal-face of capital investment and impressed
everyone present with their passion, conviction and
determination, as we shall report. GBI
GB Investment Magazine · November 2019 7
 FOCUS ON
SUCCESSFUL START-UPS:
THE BENEFITS FOR PROVIDERS,
INVESTEES AND INVESTORS

Understandably, we normally concentrate on EIS from

the investor’s perspective; so it was illuminating to hear
first-hand from a pair of start-up entrepreneurs.

A
t a recent round-table session generously a clearly defined problem in the market – and were
hosted by Hambro Perks, Alex Sullivan, providing a solution, two key criteria for Deepbridge
Managing Partner of GBi and IFA when committing to investment.
magazines, discussed how we need
Rajiv Mathur is the co-founder and chief technologist
to divert attention away from the tax efficiencies and
at Chainvine. He used to teach computer science at
benefits that an EIS can bring, and rather focus on where
Imperial College and has worked for big banks and
the money goes and how it helps the British economy.
Visa on fraud detection security.
Two key EIS providers, Deepbridge and Hambro
“When my partner and I saw blockchain, we wondered
Perks, each introduced one of their successful
how we could utilise it for enterprise. The focus wasn’t
start-ups to give us an insight into the coal face of
on the consumer, but we wanted to have a huge
capital investment.
impact on business.
Deepbridge focus on supporting technologies
“Consumers don’t care much about the technology,
aiming to provide commercial solutions to real world
just its application whereas blockchain is a technology,
problems, but try to avoid investing to simply satify
it’s in the back-end. So consumers don’t touch it or feel
buzzwords. They say that having previously been
it and we use DHCP, which is a protocol for assigning
approached by many companies claiming to be
dynamic IP addresses to devices on a network. Does
developing “blockchain” solutions, it was noticeable
this matter to the consumer? No, but using Microsoft
that many were data-processing tools attempting
Outlook to send an email really does.
to jump on the ‘blockchain bandwagon’, rather than
creating a genuinely innovative blockchain. “We wanted to create an application to allow
companies to use the new technology in the
CHAINVINE – THE REAL BLOCKCHAIN DEAL
mainstream beyond the hype and this is what we
They did, however, find Chainvine – who were did. We started by creating a platform that allows any
genuinely developing an innovative blockchain organisation to use the distributed technology without
technology, and were making a practical difference understanding it. You don’t need to understand how
in building a practical business. They had identified the email system works to send an email.

8 GB Investment Magazine · November 2019

 Round Table

“Blockchain is forcing people to make decisions about wanted to develop but couldn’t afford to hire a team,
which technology to use but Chainvine’s platform is so relied on small third-party suppliers to create code.
agnostic about the specific technology. There are 8 or They weren’t in control and IP was compromised.
9 mainstream technologies, and we can use them all
The funding allowed them to assemble an in-house
in our platform and that’s how we are different from
development department and, being based in
the rest of the market. We don’t join any alliances
Basingstoke, they weren’t paying London rents. They
and we don’t want to create a closed ecosystem but
offered graduate internships and post-maternity
encourage the emergence of an open ecosystem.
positions. Said Mathur: “Yes, it is from a vested interest,
“Businesses have shelled out billions on closed but we want to help society a little.”
ecosystems. Where we see this going mainstream
By contrast, Tempo started from scratch in
is how these systems can interoperate. Our platform
collaboration with Hambro Perks. 2 years on they
allows that and we want to create a super ecosystem
have built a big business which has grown from 2 to
that others can join.”
30 employees.
Before introducing his investee, Dominic Perks, CEO
Ollie Povey again: “We have found a gap and said
of Hambro Perks, spoke of his company’s passion for
‘Let’s go for it’, and have built a business which is
backing and building technology companies, which
the upcoming name. Without access to EIS funding
now comprise a portfolio of over 40. Hambro Perks’
someone else would have done it and overtaken us or
point of difference from the EIS perspective is that they
a bigger company in the sector would have done it.”
invest their own capital in these businesses and then
have a co-investment fund. They work closely with APART FROM THE OBVIOUS, WHAT’S IN IT
ideas-led young entrepreneurs, of whom Ollie Povey, FOR INVESTORS?
founder of Tempo, is one.
“If it goes like we want it to and we are working hard
TEMPO – HIRE ASPIRATIONS to make sure it does, investors should feel proud that
they helped build Chainvine and get real satisfaction
“Tempo is an end-to-end recruitment business
that they were involved in something ground-
which disrupts how people hire staff and how
breaking,” says Rajiv Mathur. “There are the financial
others find work. Existing recruitment channels are
benefits, and the tax benefits. But there should also
outdated and unfit for purpose from the hirers’ and
be a sense of pride in supporting a business that has
jobseekers’ perspectives.
the right sort of people and realising that you are as
“Our workforce grew up with video and technology at crucial as the team itself.
their fingertips and they don’t need to go through a 2 –
Povey agrees: “The other thing about schemes like
3 week process. They need to find the job, apply for the
EIS is that it allows investors access to businesses
job and get hired and that’s how we connect jobseekers
they’re passionate about. They might have a
and companies. We have technology that matches
prior understanding of it – they might have an
traditional CV work experience and a series of platform
involvement in the traditional HR industry, or they
data about how they engage with the platform.
have experience related to it. It’s a market they’re
“What we build is a platform which prioritises or genuinely interested in.”
streamlines to see the candidates that they want and
Dominic Perks echoed the sentiment: “Investors want
vice versa a tailored shortlist of candidates. We use
returns. We like to feel warm and fuzzy and get returns.”
video and a platform to speed up the 30-day process
to 3 days in a more engaging and personal way. Andrew Aldridge of Deepbridge concurred: “Just like us,
clients want to understand what they are investing in and
We launched about 2 years ago with Hambro Perks
when they know what they are supporting, they become
and have gone from a 2-man band to pushing 30 staff.
passionate. People understand entrepreneurship in the
We work with 30,000 candidates, 2,500 companies
UK and are enthused about it, but perhaps 10 or 15
and have placed 1,000 people in work in London.”
years ago it wasn’t seen as a career like now. People can
WHAT WERE THE BUSINESSES LIKE BEFORE really buy into supporting that.” GBI
EIS FUNDING?
Chainvine was self-funded for 18 months before
Deepbridge stepped in. They had technology they

GB Investment Magazine · November 2019 9

Invest in the UK’s most
exciting entrepreneurial
businesses and benefit CE
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winning leader of tax efficient investment.
The Calculus EIS Fund and Calculus To find out more get in touch on:
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strong growth potential, over a 020 7493 4940 or visit
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Before investing in the Calculus VCT or Calculus EIS Fund, you should read their respective Prospectus and Information
Memorandum carefully and take professional advice. EIS and VCT are long term investments, and their value can fall as
well as rise. Any person making a subscription to the VCT or EIS Fund must be able to bear the associated risks.