Deepbridge achieves record EIS fundraising levels
Venture capital investment manager Deepbridge Capital has seen a record year of Enterprise Investment Scheme (EIS) fundraising, with GBP29.4 million deployed across 37 growth companies. This represents an increase from 2019/20 and 2018/19 in which GBP21 million and GBP28 million were deployed respectively. Deepbridge manages the Deepbridge Technology Growth EIS and the Deepbridge Life Sciences EIS.
Deepbridge believes that its success this year - which is understood to contrast with the wider Enterprise Investment Scheme fundraising market - is down to the firm’s relationship with the advisory market and long-term sector focus on growth companies in the technology and life sciences sectors. For example, in the UK, the development of Covid treatments and vaccines has propelled the UK ahead as a leader in innovation across the life sciences spectrum and boosted investor interest in companies operating within it.
This year also saw Deepbridge work alongside other institutions to support investee companies. Last month it supported VoxSmart, the global leader in communications surveillance, in successfully completing an GBP18 million growth equity financing round alongside multi asset fund management firm, Toscafund Asset Management LLP.
Some of the 37 innovative technology and life sciences companies that have benefited from Deepbridge’s EIS funding during 2020/21 include: blockchain specialists Chainvine, drug-discovery company Elasmogen, cross-border ecommerce software company Hurricane Modular Commerce, vital signs monitoring specialists Metix, finger-print sensor technology pioneers Touch Biometrix, dysphagia management technology developer Viscgo, regtech experts VoxSmart and cancer diagnostic innovators Zilico.
The EIS is a decades-old Government initiative, which follows pensions and ISAs in being a tax incentivised scheme to encourage investor behaviour. Designed to help smaller higher-risk trading companies raise finance, EIS offers a range of tax relief to investors who purchase new shares in those companies. Investors can benefit from potentially significant income tax and capital gains reliefs when making an investment into an EIS eligible start-up or business. EIS also provides 100 per cent exemption from inheritance tax, as well as CGT deferral relief.
Ian Warwick, Managing Partner at Deepbridge Capital, says: “Twelve months ago the world was an uncertain place and we didn’t know what to expect from the 2020/21 tax year. We are, therefore, particularly delighted to report a record year of EIS fundraising, with almost GBP30 million of equity funding having been provided to 37 highly innovative technology and life sciences companies.
“The Enterprise Investment Scheme offers UK investors world-leading tax incentives in return for supporting growth-focused early-stage companies, which is currently relevant as such companies are likely to be at the heart of economic recovery over the coming months and years. Our record level of EIS fundraising is down to the ongoing backing of our amazing community of financial advisers and private investors, as well as remarkable work by the Deepbridge team. We thank everyone for their continued support.”
Caroline Barelle, CEO at Elasmogen, comments: “It is extremely important for Elasmogen that we work with the right funding partner. Deepbridge’s Life Sciences team understands our company and our sector, with their support therefore being invaluable and much appreciated.”
Martyn Noble, Chairman and CEO at Hurricane Modular Commerce, adds: “When looking for external finance, it was important to our team that we worked with an organisation that not only could provide us with the capital we needed at each stage of the company’s growth but which would also proactively work with us at a strategic and tactical level to drive the business forward globally – we have been delighted with Deepbridge’s commitment and delivery to both aspects but also the manner and style in which they work. The UK’s Enterprise Investment Scheme provides growth-focused tech companies, such as Hurricane, a real competitive advantage in sourcing early-stage capital.”
Alan Sheehan, Director at MICAP, comments: “While it is great to hear that Deepbridge’s fundraising is going so well, MICAP's market data suggests that EIS fundraising in the 2020/21 tax year is lagging significantly behind 2019/20. That said, we are hopeful that as the world returns to normality, we will start to see a return to the level of inflows seen prior to the pandemic. The investment (and tax) case for these investments remains very strong.”