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Love Ventures Fund I

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The objective for Love Ventures Fund I is to deliver tax-free capital growth from a portfolio of EIS Qualifying Investee Companies. Love Ventures Fund I is a new EIS Fund investing in early-stage companies which are leveraging technology in a post-Covid world to accelerate their growth. Love Ventures are looking to partner with exceptional founders in the FinTech, PropTech and ConsumerTech sectors.

  • £25,000
    Min. Investment
  • Technology
    Sector
  • EIS
    Fund Type

There is a strong ‘why now’ case for investing in the technology sector. The UK has one of the best environments for start-ups and early-stage companies. Many were already flourishing before the Covid pandemic but disruption has been global and touched all industries. Companies which have been able to adapt quickly and embrace technological change are thriving. Love Ventures are interested in the technologies driving these changes.

Love Ventures like ‘mega-trends’, one example being the move from a cash to a cashless society. This move was already under way but the pandemic has accelerated this trend. Another trend is the advance of Open Banking and the ability of financial apps and businesses to link up with each other, promoting increased collaboration and efficiency.

They believe the Fund offers a unique opportunity to gain access to these fast growing companies. There team are laser-focussed on finding these opportunities, often off-market, and uncovering the next gems of tomorrow. The team have a strong background of identifying visionary founders and helping bring them from seed stage up to Series A.

This is an identified funding gap in the UK market where Love Ventures can add value and assist companies with their growth up to Series A and beyond.

The Fund is as a discretionary managed portfolio service structured as an Alternative Investment Fund (‘AIF’). Love Ventures has a team of three Directors and six advisers in the Investment Committee. The combined experience of the Directors is of over 20 investments, two angel networks and the advisers have exited multiple businesses.

The Fund is the first Love Ventures fund and is dedicated uniquely to investing in early-stage UK based technology companies. Further funds are anticipated to be larger in size and have a larger capacity for follow-on investments.

Investment opportunity

● Early-stage investing offers the potential for higher returns, with Investee Companies on the cusp of accelerated growth and a path to a larger stage Series A

● The opportunity for retail investors to invest alongside institutional VCs and high-profile angel investors and with the benefits of EIS tax reliefs

● Invest in the Fund alongside an experienced and diverse team of successful entrepreneurs and investment professionals who have been operating for 5+ years in the UK’s seed/early-stage ecosystem

● There is a strong case for ‘why now’ with accelerated shift towards digital transformation, negative returns on cash due to low interest rates and discounted funding valuations

Highlights

  • Successful team with track record and founder exit
  • Consistent dealflow with off-market opportunities
  • Follow on funding relationships with Series A+ VCs

Investment strategy

Love Ventures believe it is critical that early-stage businesses have the appropriate support and infrastructure to grow and flourish to Series A investment and beyond. This is where Love Ventures can add value with their own experience as entrepreneurs and advisers and through their network of contacts. Due to the amount they can allocate to each opportunity they will also be adopting a co-investment philosophy to ensure Portfolio companies are well capitalised on their journey from Seed to Series A.

The Fund will focus on the equity gap between Seed and Series A. The team have had many conversations with potential investee companies with a view of Sapphire making an investment when the Fund is live. They have unique access to startups due to power of the Directors’ personal networks in the angel investment space.

As angel investors, each of the Directors have had to develop a comprehensive and proven network for sourcing deals in order to access off-market opportunities.  The team source deals from accelerator programmes, universities, events, LinkedIn and through their relationships with venture capitalists. The Directors review over 50 deals a month.

Love Ventures will continue to develop their brand through networking, events, webinar and video content. This increased network velocity assists with greater deal flow for the Fund.

Key team

Marcus Love - Director

Marcus has over 14 years of experience as a FCA approved financial professional. He worked in IT consultancy for over 9 years in Paris. He then worked with William O'Neil +Co in London for 8 years in equity research sales. During this period he specialised in identifying growth companies globally, built an angel syndicate and co-founded Love Property.


Adrian Love - Director

Adrian is a Chartered Surveyor and investment professional. He worked at flexible workspace specialist The Instant Group during its acquisition by MML Capital. He now works part-time at Dorrington PLC, a £1.4b private investment company, where he is an asset manager of a £200m residential portfolio. During this period he also co-founded Love Property and recently led PropTech company Deepfinity's seed funding round where he is a Board Observer.


James Pringle - Director

James is a technology entrepreneur. James sold video and machine learning technology startup Suggestv in 2019. He now operates Pringle Capital, one of the UK's largest angel networks. James is a Seedcamp alumnus from his time as an employee of MatchChat and the host of the Riding Unicorns Podcast.


Exit strategy

Love Ventures will work with each Investee Company to develop a range of appropriate exit strategies on behalf of the Fund. This will include trade sales to other companies in the same sector or industry, listing on an appropriate stock exchange, or selling its share of the Investee Company or a portfolio of its investment to a large private equity firm.

The Fund has a patient approach to investments and any investment by the Fund will have a long-term view. They will endeavour to exit investments after they have been held for at least the Three Year Period, in line with the qualifying conditions for EIS tax relief. However, there may be occasions where an earlier exit is a commercially sensible decision and the exit proceeds are considered sufficiently attractive to outweigh the impact of any loss of EIS tax reliefs.

They anticipate that most exits will take place after the investment has been held for at least five years, with the average being closer to seven. Some investments could take significantly longer depending on market conditions and the growth of the Investee Company.

There are increasing liquidity opportunities thanks to secondary market offerings being launched by Seedrs and Crowdcube in the UK, although this may not be available for Investee Companies. 

Products and services

The Fund is focussed on three sectors with very large total addressable markets: Finance, Property and Consumer. The Fund’s areas of focus include but are not limited to:

FinTech - Accounting, Banking, Cybersecurity, Digital Cash, Insurtech, Loans, Payments, Payroll, Pensions, Wealth.

PropTech - Collaborative Software Platforms, Data Management, Geospatial Technologies, Logistics, Smart Buildings & Cities, Sustainability, The Future of Work, The Internet of Things (IoT).

ConsumerTech - Artificial Intelligence, Digital Health & Wellbeing, Ecommerce, Fitness, Personalisation, SaaS (Software-as-a-Service), XaaS (Everything-as-a-Service).

Fee summary

Upfront fee

The Fund charges an initial upfront fee of 3% of the amount invested. This initial charge will be paid to Love Ventures VC Limited and covers the establishment and ongoing costs of the Fund. 

Management fee

The Fund charges an annual management fee of 2% of the amount invested. This is payable up to a maximum of five years and covers investment management costs with Sapphire Capital Partners LLP, Mentoring Service fees, custodial fees, reporting to investors, administration and accounting costs, legal costs and portfolio management.

Performance fee

The Fund charges a performance fee of 20%. The fee is due on any proceeds from an investment in an Investee Company and is split 15% to Love Ventures and 5% to Sapphire Capital Partners LLP.

Transaction fee

Prior to any potential distribution being made to an Investor from the Fund in relation to each Investee Company, a transaction fee of 0.25% of the total proceeds shall be deducted and paid to the Custodian.

Initial charge (to the Investee Company)

The Fund charges a fee of 2% to the Investee Company to cover deal execution fees, custodian and administrative costs including a 0.25% dealing charge on initial investment into each Investee Company, as well as strategic and business support.



Risks

Investment risk

The value of shares can go down as well as up and this could result in an Investor incurring a total loss of their Investment. The Fund will invest in early-stage opportunities in the technology sector. By definition early-stage investing carries a higher risk. If successful this offers the potential for higher returns. If unsuccessful it may result in greater or total loss of the investment. The Fund is taking minority positions in Investee Companies. As a minority investor the Fund may be less able, or unable, to materially influence the policies pursued by an Investee Company. 

The products and technologies developed by Investee Companies may not be commercially successful. Investee Companies are very likely to make borrowing arrangements from third parties. Fund shareholders rank behind these creditors should there be an insolvency situation. 

Economic and Political risks

The value of the Investor's Investment may be affected by a range of external factors including but not limited to economic and political conditions, interest rates, fluctuations in foreign exchange rates, etc. As a result of the United Kingdom’s decision to leave the European Union and as a result of the COVID-19 World Health Organisation declared pandemic, there may be a period of uncertainty and a potential economic downturn or recession. Any uncertainty and downturn or recession in the economy of the United Kingdom or in the economy of a country trading with the United Kingdom may have an the adverse impact upon the prospects of the Investee Companies and therefore negatively impact the Investments made by Investors.

Team risk

Access to suitable Investments and the mentoring of those Investments is dependent on the Directors of Love Ventures VC Limited. Any change in the Directors or employees of Love Ventures VC Limited may have a negative impact on the deal-flow and materially affect the financial performance of each Investee Company. In particular, the Fund is dependent on the services of Love Ventures VC Limited (including Directors Marcus Love, Adrian Love, and James Pringle) to act as the Company Mentor. Any loss of these services may have an adverse impact on the Investee Companies and therefore a negative impact on the returns generated to Investors.

Taxation risk

Investors are encouraged to seek advice from their tax, professional or financial advisers regarding their personal tax position. Mention in this Information Memorandum of the tax advantages relate to the generic position of a UK-resident individual higher-rate taxpayer and does not constitute tax advice to any person. Tax legislation administered by HMRC is subject to change at any time and tax advantages may be amended or withdrawn. Any loss of EIS qualifying status by an Investee Company or change in an individual’s circumstances may lead to the loss of the Investor’s tax advantages.


Documents

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The content above has been provided by Love Ventures, an Investment Adviser to Sapphire Capital Partners LLP who are authorised and regulated by the Financial Conduct Authority under firm registration number 565716.