Velocity EIS Technology Fund - Q 201 Velocity Capital Advisers Ltd - LGBR Capital
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Velocity EIS Technology Fund +
Q& 201.
1
Velocity Capital Advisers Ltd.
DISCLAIMER
Reliance on this promotion for the purpose of engaging in any investment activity may more than 20 members, otherwise £5 million; any unincorporated association or
expose an individual to a significant risk of losing all of the property or other assets partnership which has net assets of not less than £5 million.
invested. Any individual who is in doubt about the investment to which this document (d) Article 50: Sophisticated Investors. Such an investor must have a requisite certificate
relates should consult an authorised person specialising in advising on investments of signed by an authorised person to the effect that he is sufficiently knowledgeable to
the kind in question. understand the risks associated with this type of investment and must have signed a
This document constitutes a financial promotion pursuant to section 21 of FSMA. Its contents requisite statement within the last 12 months declaring that they qualify under this
have been approved for the purposes of section 21 of FSMA by Sapphire Capital Partners LLP, exemption.
which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (e) Article 50A: Self-certified Sophisticated Investors. Such an individual must have signed
and whose registered office is at 28 Deramore Park, Malone, Belfast BT9 5JU. the requisite statement within the last 12 months. To be self-certified an individual must
This document contains outline information regarding the proposed fund Velocity EIS meet one of the following criteria:
Technology Fund 5 (the “Fund”). The information in this document is incomplete, and is subject (i) be a member of a network or syndicate of business angels for at least six months;
to updates, revision, verification and amendment. This document does not constitute, or form
part of, any offer to subscribe to the Fund, nor shall it (or any part of it) or the fact of its (ii) have made more than one investment in an unlisted company in the prior two years;
distribution form the basis of, or be relied upon in connection with, or act as any inducement (iii) be working or have worked in the prior two years in a professional capacity in the
to enter into, any contract or commitment whatsoever. Recipients of this document who are private equity sector or the provisions of finance for small and medium enterprises;
considering subscribing into the Fund are reminded that any such subscription must be made
(iv) are or have been in the two years prior a director of a company with an annual turnover
only on the basis of the information contained in the formal offering document relating to the
of at least £1 million.
Fund, which may be different from the information contained in this document. By receiving
this document and in consideration of it being issued, the recipient warrants that he/she falls If you are in any doubt about whether the investment described in this document is suitable for
within one of the following categories of person in the Financial Services and Markets Act 2000 you, you should seek a personal recommendation from an authorised person specialising in
(Financial Promotion) Order 2005 (which thereby renders this communication exempt from the advising on investments of this kind.
general restriction in section 21 of the Act): The price, value or income of or from securities may fall and you may lose all of the capital
(a) Article 19: Investment Professionals. This includes authorised persons; persons whose that you invest in the Fund. Investments in unquoted companies are not readily realisable or
ordinary activities involve him in carrying on the controlled activity to which the transferable and you may not be able to realise your investment when you want to do so. This
communication relates for the purpose of the business carried on by him; persons who it is document may contain projections and information on past performance. Neither past
reasonable to expect will carry on such activity for the purposes of a business carried on by performance nor projections are a reliable indicator of future results.
him. This document is provided to you in strict confidence. You are not permitted, unless required to
(b) Article 48: Certified High Net Worth Individuals. Such an individual must have signed the do so by law, to use the information in this document for any purpose except that of investing
requisite statement relating to his net worth within the last 12 months; to be a certified in the Fund or advising in relation to the same. No representation or warranty is made by
high net worth individual an individual must meet one of the following criteria: Velocity Capital Advisors Limited or Sapphire Capital Partners LLP (or any of its directors,
officers, employees or agents) as to the information and opinions contained in this document.
(i) had annual income in the preceding financial year of at least £100,000;
Please note that an investment in the Fund can only be made after an investor has received
(ii) had net assets throughout the preceding financial year of at least £250,000 (excluding
and read the Key Information Document, the full Information Memorandum and completed
primary residence and certain other assets).
an original application form. This document does not constitute an offer for shares or an offer
(c) Article 49: High Net Worth Companies. This includes body corporates with a called up or inducement to engage in any investment activity.
share capital or net assets of not less than £500,000 where it or its parent undertaking has
2
W H AT V E LO C I T Y C A P I TA L A D V I S O R S L I M I T E D D O E S
• EIS fund focussing on technology enabled businesses
• “Since its inception, Velocity has been seeking to make investments that
offer investors significant capital appreciation opportunities”
Michael Whitfield, Chairman, Velocity Capital Advisors Limited
• Velocity Capital Advisors Limited (“Velocity”) seeks to take an active, not
passive management approach with Fund investee companies
• Velocity looks to work with companies that are innovative, can scale
quickly and provide a product or service that is genuinely useful to their
customers, whether B2C or B2B
3
V E LO C I T Y C A P I TA L A D V I S O R S L I M I T E D P O I N T S O F D I F F E R E N C E
• Entrepreneurial backgrounds: Velocity’s founders, as entrepreneurs,
have all successfully built and exited multiple businessess
• Marketing prowess: the founders of Velocity have an emphasis on
marketing experience. This can assist in identifying ideas that will resonate
with a given target audience
• “Skin in the game”: over £1.5M of Velocity founders’ own wealth has
been invested in Velocity investee companies
• Rigorous process: a clear staged process for making investment decisions
Pipeline Transparency: 10 future EIS investments already identified
Carryback available: anticipated allocation of funds pre 5th April 2019
4
VELOCITY PRIOR FUNDS OVERVIEW
Overall Prior Funds Performance**
• Three year track record, prior funds have invested x2.5
in 12 companies since launch in 2015
• Target return 2.5x
x2.0
• Target exit within 5-7 years
• One partial cash exit of 6.5x* in 13 months in prior fund
• Fund seeks a speedy deployment targeting pre x1.5
April 5th 2019 allocation Multiple
• Closing date of March 31st 2019
x1.0
x0.5
0
2016 2017 2017
I II
*Represents a partial exit from an investee company. **Please note that past performance should not be
regarded as an indication of the performance of future investments made by Velocity EIS Technology Fund 5.
These returns stated are dependent on a future liquidity event such as a trade sale, IPO or other liquidity event.
5
VELOCITY TEAM
The Investment Committee
Rajeev Saxena
Raj began his career in advertising before becoming the Marketing Director of Red Bull Energy Drink,
UK & Ireland. He completed an MBA at the I.M.D. in Lausanne and has since founded a series of successful
entrepreneurial businesses across a range of industries, including a 200MW wind farm development in
Turkey.
Bil Bungay
Co-founder of Beattie McGuiness Bungay (BMB), an advertising agency that went on to become one of the
fastest growing agencies by clients and considered one of the most creative advertising and marketing
agencies of the decade. Bil has a lifelong passion for innovation and creativity and has mentored numerous
early stage businesses including Purple Bricks. As deputy chairman of BMB, Bil maintains a strong
connection with the agency he co-founded
Alex Johnston
Alex is an independent app developer and investor operating in the emerging message technology sector. He
also serves on the board of The Duke of York’s “Pitch in the Palace” global innovation platform, Tim Berners-
Lee’s Web Foundation, Singer Asia, and Freuds - the UK’s leading communications agency, where he was a
founding partner. Prior to his current roles, Alex was Executive Vice President of Omnicom - advising on
digital strategies and managing their digital incubation initiatives. He was senior communications advisor to PepsiCo Inc.
and managing partner at Fleming Media, a rights media acquisition fund.
6VELOCITY TEAM (CONTINUED)
The Investment Committee (continued)
Tom Lindup
Tom began his career as a Corporate Finance lawyer at Sidley Austin LLP, advising on debt and equity capital
markets, mergers and acquisitions and private equity transactions. Tom left Sidley Austin to join Van Elle Limited as
Group Managing Director in March 2015, successfully steering the group through its AIM flotation in October 2016, by
which time it was the largest, most profitable geotechnical engineering company in the UK. After leaving Van Elle,
Tom co-founded GDL Advisors. Tom is a graduate of King’s College London, and is currently studying an Executive MBA at the
University of Nottingham Business School.
Mark Brownridge, Non-Executive Director
Mark has over twenty years’ experience in Financial services and prior to his current position he was Head of
Research and Development at Mazars, a leading UK financial planning firm. Mark is highly qualified being a Certified
Financial Planner, Chartered Financial Planner, Chartered Wealth Manager and Fellow of the Personal Finance
Society and previously sat on the Chartered Institute of Securities and Investments Accredited firms committee and
TISA’s Distribution Policy Council.
7VELOCITY TEAM (CONTINUED)
The Board
Michael Whitfield, Chairman
Michael has worked in financial services, employee benefits and technology for over 35 years. In 2000 he left
Alexander Forbes, where he was European managing director of their financial services division, to set up his
own technology business, Thomsons Online Benefits. Thomsons software, Darwin, became the world’s
leading software for benefits administration, and employee engagement, and is used in over 90 countries. In
2016, Michael sold Thomsons to Mercer, part of MMC, a NYSE listed company. Since leaving in 2017, Michael has invested
in, and become a director of, several high growth technology businesses. Outside of his commercial interests, Michael is
Chairman of Barnes RFC, a Trustee of Jason Leonard’s Atlas Foundation, and on the Business Development Boards of Try
For Change and Dallaglio Rugby Works.
Mark Raj Bil Alex Tom
Brownridge Saxena Bungay Johnston Lindup
8THE VELOCITY STRUCTURE
Six People Board of Directors Meet on a monthly basis
Five People Investment Committee Meet every other month
and monthly in Q1 in 2019
Three People Operations Board Meet on a weekly basis
Portfolio Companies in Prior Funds
• Report to Velocity each month
• Present to investment Committee every six months
• Are reviewed by Velocity every six months
9THE VELOCITY INVESTMENT PROCESS
£
• Six stage rigorous approval 6
Investment
process to investment
• Unanimous approval
• Timeframe between Compliance
3 months to a year 5
sign-off
X
Formal IC
4 Presentation
Step X
• Provision of
Investment full DD pack
3
Term sheet
X
Ops Team
2 DD
X
• Business plan review
Initial IC • Market review
1 Contact • Investment criteria check
(face to face) X • Valuation
DEALFLOW
Timeframe: 3 months - 1 year
10INVESTMENT CRITERIA
USEFULNESS
Is there a demonstratable market demand
for the product or service?
INVENTIVENESS
Is the company and the product/service innovative?
SCALABILITY
Does the product/service have global potential?
SPEED TO MARKET
How quickly can the company get its
product/service to market?
MANAGEMENT
Does the company have a strong, well-balanced
and motivated management team?
EIS ADVANCED ASSURANCE
Has obtained EIS advanced assurance
11W H Y D O S TA R T - U P S FA I L ?
Top 20 reasons start-ups fail based on an analysis of 101 start-up post mortems - Source: CB Insights
Failure to Pivot 7%
Burn Out 8%
Don’t Use Network / Advisers 8%
Legal Challenges 8%
No Financing / Investor Interest 8%
Bad Location 9%
Lack Passion 9%
Pivot Gone Bad 10%
Disharmony on Team / Investors 13%
Lose Focus 13%
Product Mis-Timed 13%
Ignore Customers 14%
Poor Marketing 14%
Need / Lack Business Model 17%
Poor Product 17%
Pricing / Cost Issues 18%
Get Outcompeted 19%
Not The Right Team 23%
Ran Out of Cash 29%
No Market Need 42%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
*www.cbinsights.com/research/startup-failure-reasons-top/ (accessed 8th November 2018)
12E I S A L LO C AT I O N S T R AT E G Y *
£1,000,000
£900,000
£800,000
£700,000
£600,000
Average
Deal Size £500,000 • Allocation strategy bias towards
lower risk, higher revenue
£400,000 businesses. NB: This is still
within the context of a high risk,
high capital appreciation portfolio
£300,000
£200,000
£100,000
£0
Early stage Post revenue Post revenue Series A
Stage pre-revenue up to £300k per annum up to £300k per annum
Allocation 10% 30% 60%
Risk Profile High Medium Low
*Anticipated investment allocation subject to Investment Committee and Sapphire Capital Partners LLP approval
13E I S - E X I S T I N G P R I O R F U N D P O R T FO L I O C O M PA N I E S
S L AT E D FO R FO L LO W - O N I N V E S T M E N T *
Turn your smart phone into the Booking platform for Sustainable fashon brand for AI that sees better than we can 3-D printing platform
ultimate instrument burgeoning tatoo industry millennials
AI to place workers in the Using ASR and gaming to The home of stand-up comedy Sound Circles - Innovative and “Gousto” for Asian food
retail sector encourage kids to read new way to message
*All follow-on investments are subject to Investment Committee and Sapphire Capital Partners LLP approval and may be supplemented by additional investments
14VELOCITY INVESTOR FEE STRUCTURE1
VELOCITY EIS TECHNOLOGY FUND 5
Min Fund Size £200,000
Max. Fund Size £10,000,000
Min. Subscription per Investor £25,000
Target Closing Date March 31st 2019
Typical Investment £50,000 - £1,000,000
Target Fund Term 5 years from final closing
(Max. term of Fund: 7 years after final investment)
Initial Fee 0% of Net Subscriptions2
Annual Fee Annual Administration and Monitoring Fee: 2%3
Performance Fee 20% of all amounts returned over and above £1.10
(based on a £1.00 Net Subscription amount)
Custodian Woodside Corporate Services Limited
reports available
1. For full disclosure on fees, please refer to the Information Memorandum and the Key Information Document
2. Establishment fee of 5% of Net Subscriptions charged to portfolio companies
3. The Fund will hold back two years fees up front at fund level. In the worst case scenario an investor should
expect to receive EIS tax relief on 95.2% of their net subscription. Where possible, the Annual Administration
and Monitoring Fee will be charged to investee companies
15S E C U R E O N L I N E P O R TA L S – I N V E S TO R A N D A D V I S O R Investor Online Self-Service Portal • Valuations and Statements • Cash Positions and Movements • Fees and charges • Document Sharing e.g. EIS 3 • Secure Correspondence • GDPR data • Online Applications Adviser Online Self-Service Portal • Review Client Portfolios (as investor portal) • Online Applications for Clients • Review Charges and Facilitation • Adviser API to their own back office • Secure Correspondence 16
POINTS OF DIFFERENCE
• Entrepreneurial backgrounds: Velocity’s founders, as entrepreneurs,
have all successfully built and exited multiple businessess
• Marketing prowess: the founders of Velocity have an emphasis on
marketing experience. This can assist in identifying ideas that will resonate
with a given target audience
• “Skin in the game”: over £1.5M of Velocity founders’ own wealth has
been invested in Velocity investee companies
• Rigorous process: a clear staged process for making investment decisions
Pipeline Transparency: 10 future EIS investments already identified
Carryback available: anticipated allocation of funds pre 5th April 2019
17C O N TA CT D E TA I L S
Velocity Capital Advisors Ltd LightTower Partners Sapphire Capital Partners LLP
Mortimer House Candlewick House 34 South Molton Street
37-41 Mortimer Street 120 Cannon Street Mayfair
London London London
W1T 3JH EC4N 6AS W1K 5RG
+44 (0)207 139 4450 +44 (0)20 7071 3920 +44 (0)800 054 5070
18APPENDIX 19
VELOCITY PROFESSIONAL ADVISOR SUPPORT 20
VELOCITY IN-HOUSE SUPPORT SERVICES
Alliance
Academic Partnerships
Board
Co-Funding Accounting
Representation
& Grants
Funding
Marketing Mentors Legal
Brand Consumer
Strategy Research
21APPENDIX - CASE STUDIES - WESEE
What does the company do: WeSee has developed a deep learning technology that can recognise objects and
interpret human emotions in real time
When initially invested: First investment made in Apr 2016 of £149,992.92 at £0.85 per share with further follow
on investment in 2017 of £446,655.26 at £2.47 per share and 2018 of £112,999.94 at £2.47 per share and £99,895.88
at £3.60 per share
Who Co-invested: HNWI
Current share price at latest round: £3.60 (4.2x from first investment)
What was the Velocity Value add?: Helped develop the brand strategy, recruit key management and introduction
to major clients
Where is the company going: The company secured a meaningful government contract and is anticipating a
Series A round in Q2 2019
22APPENDIX - CASE STUDIES - AURIS
What does the company do: Auris Tech Limited is pioneering Automatic Speech Recognition (ASR) for children’s
read-speech, with its patent pending ASR model. This model has been devised in collaboration with the University of
Edinburgh
When initially invested: First investment made in Apr 2016 of £24,999.26 at £87.41 per share with further follow on
investment in 2017 of £150,096.00 at £156.35 per share and 2018 of £156,933.68 at £164.17 per share
Who Co-invested: Amersham and Old College Capital
Current share price at latest round: £164.17 (1.8x from first investment)
What was the Velocity Value add?: Introduced Claire Balding as brand ambassador, Recruited the CEO, introduced to
co-investors
Where is the company going: Their first product “Fonnetti” a children's reading app is scheduled to launch Q1 2019
23A P P E N D I X - C A S E S T U D I E S - N E X T U P. . .
What does the company do: NextUp is a worldwide subscription video channel specialising in live comedy
specials. For fans - NextUp offers a comprehensive catch-up and discovery platform, and for comedians - they
preserve, showcase and monetise their work
When initially invested: First investment made in June 2017 of £58,334.08 at £130.21 per share with further
follow on investment in 2018 of £89,870.88 at £170.21 per share
Who Co-invested: Seedrs, Syndicate Rooms and other Angels
Current share price at latest round: £170.21 (1.3x from first investment)
What was the Velocity Value add?: Currently developing the company’s 12 month strategy alongside management
Where is the company going: The company has secured deals with Virgin Atlantic, Audible, Amazon and BBC and
has plans to expand onto further smart TV devices and become The Home of Stand-Up
24APPENDIX - CASE STUDIES- SONIC JOBS
What does the company do: Sonicjobs is a virtual recruiter for hospitality & retail that looks to find the right
candidates and jobs, instantly! Their Chatbot Julie combines occupational psychology, big data and AI to find,
screen, score and connect employers with the right candidates. The platform now has over 70,000 job seekers and
over 2,800 employers
When initially invested: First investment made in June 2017 of £89,999 at £128.57 per share with further follow
on investment in 2018 of £189,973 at £179.22 per share.
Who Co-invested: Angel Co-Fund and high profile recruitment Angels
Current share price at latest round: £179.22 (1.4x from first investment)
What was the Velocity Value add?: Currently developing the company’s 12 month strategy alongside
management, introduced them to large hospitality chains
Where is the company going: Sonic Jobs is currently focussed on the London hospitality market and are looking
to roll out in Manchester, Birmingham and Leeds. Sonic jobs has also successfully tested a subscription model
which will also form part of their rollout
25APPENDIX - CASE STUDIES - SOUND CIRCLES
What does the company do: Sound Circles are short-format audio clips embedded into static images sent as
social messages or posted as promotional experiences
When initially invested: First investment made in June 2017 of £75,000.63 at £8.27 per share with further
follow on investment in 2018 of £74,993.40 at £10.98 per share
Who Co-invested: Angels
Current share price at latest round: £10.98 (1.3x from first investment)
What was the Velocity value add?: Introduced the business to Micromax, its mobile partner in India, sector
VC’s and commercial partners
Where is the company going: The company is well on its way in achieving 2m monthly active users and are
currently in talks with other mobile operators to enter other emerging markets
26A P P E N D I X - C A S E S T U D I E S - I TA R
What does the company do: The iTar is a novice and pro style interactive digital guitar that builds on the
success of smartphones and social media to boost guitar learning, revive music gaming and open up the
millennial generation to music instruments
When initially invested: First investment made in 2016 of £142,497.15 at £32.37 per share with follow on
funding in 2018 of £249,968.24 at £48.56 per share
Who Co-invested: Symvan
Current share price at latest round: £48.56 (1.5x from first investment)
What was the Velocity Value add?: Launch of itar at NAMM Show in the USA in January 2018. Help setup a
successful Kickstarter programme as part of next fundraising anticipated in Q1 2019
Where is the company going: The company is shortly completing its third prototype ready for launch
27APPENDIX - CASE STUDIES - IYNK
What does the company do: iynk a mobile geo-location based tattoo marketplace, connecting customers to
tattoo artists
When initially invested: First investment made in 2018 of £120,000 at £48 per share
Who Co-invested: Angel
What was the Velocity Value add?: None as of yet due to this being a recent investment
Where is the company going: They are developing a seamless, end-to-end tattoo marketplace. Users can find
tattoo artists, chat to them about what they would like, book directly in-app and then review once they have
been “iynked”
28A P P E N D I X - C A S E S T U D I E S - Z I LV E R
What does the company do: ZILVER is a ready-to-wear gender fluid brand created by a team that believes in
ethical sourcing and sustainability. Founded by designer and creative director Pedro Lourenço (high profile
designer, previously Creative Director at La Perla)
When initially invested: First investment made in 2018 of £213,998.40 at £14.10 per share
Who Co-invested: Vision Brazil
What was the Velocity Value add?: Established, strong business discipline, introduced industry experts to
assist the business
Where is the company going: The company had a very positive response from the fashion industry on their
first collection and have entered into discussions with retail giants Selfridges, Barneys & Far Fetch
29Velocity EIS Technology Fund +
Q& 201.
30
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