Nova Cofoundery EIS Fund

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Nova Growth Capital's deal flow comes exclusively from its Cofoundery, a venture builder that has seen 36.5% growth in its portfolio year on year for 11 years.

  • £10,000.00
    Min. investment
  • Technology (Software)
    Sector
  • EIS
    Investment type

Members of the Nova team have spent the last 10 years developing their cofoundery model which we believe addresses 5 of the most common mistakes made by startups.

The Fund is intended for those UK tax paying individuals:

• Seeking a diversified exposure in a highly concentrated asset class to knowledge intensive companies in the UK

• With income tax liability in the preceding or current tax years

• With large capital gains to defer or mitigate

• Who look to benefit from IHT relief

The minimum individual investment in The Fund is £10,000. At the Investment Manager's discretion, smaller individual investments may be accepted, however, this is not guaranteed. The selection of investee companies and the subsequent allocation of investor’s subscriptions to the investee companies are made at the discretion of the Investment Manager with guidance from the Investment Advisor.

Highlights

  • An engaged hands-on approach from an experienced startup team
  • Free of manager fees to the investor for subscriptions received via a financial adviser, facilitating up to 100% deployment of investor funds and aiming to ensure maximum tax efficiency for the investor
  • All EIS tax advantages applicable, depending on personal circumstances and subject to HMRC approval
  • Target return of 172p for every 100p invested
  • Performance fee aligned with the investor's interests
  • The potential to deliver investor returns of up to 10x investment cost on disposal of an investee company

Investment strategy

The investment objective of the Fund is to generate returns of £1.72 for every £1 invested (does not include any tax reliefs).

The Cofoundery model works by operationally addressing what we believe are 5 of the most common mistakes which account for 80% of all the mistakes which startups make:

• Building something nobody wants

• Having the wrong cofounders

• Hiring the wrong people

• Failing to execute sales and marketing

• Chasing investors and not customers

Each investors' funds are co-invested alongside Nova into a diversified cohort within Nova’s portfolio of at least ten early-stage knowledge-intensive companies, this diversification is large enough to reasonably mitigate the risk of failure across the whole cohort. The Fund further aims to reduce risk and increase returns by allowing the investor to take advantage of considerable income tax, capital gains tax, and inheritance tax benefits available under the Seed Enterprise Investment Scheme or Enterprise Investment Scheme providing that the investor is a UK tax payer and subject to HMRC approval. 

Nova take, in it's view, a modern approach to deal origination and founder due diligence, regularly appraising over 25 opportunities before making an investment.

Nova leverages what it believes is appropriate technology with the aim of inexpensively sourcing and mentoring potential founders. This gives, in our view, a tremendous capability to perform real “in person” due diligence on our entrepreneurs before we co-invest and it allows us to understand and model our performance funnel and gives us excellent control of deal flow. We typically see over 25 opportunities per investment that we make.Examples of eligible opportunities could include innovative software development, new medical technology applications or fintech or ed-tech innovation, originated by a founder with appropriate domain expertise. Such investee opportunities will strive with hands-on guidance, mentoring and execution from their cofounding team at Nova, towards the delivery of a proof of concept, minimum viable product, or prototype.

The Company will use this deliverable to demonstrate utilisation by early adopters to position the Company optimally for a potential SEIS or EIS raise to fund commercialisation and growth. Nova provides human resources and services to each start-up within the portfolio on a flexible basis. This helps to prevent the start up from locking in fixed monthly costs and aims to provide a flexible cashflow runway and helps to ensure the start-up has the optimum mix of skills and experience to achieve their objectives. Nova receives part of its payment for these services in cash and invests part of its payment on the same terms as the Fund, hence coinvesting. This aims to ensure the alignment of both Nova and the Fund Investors in seeking successful exits for the portfolio companies.

Key team

Paul Morrissey - Chairman

Paul is a veteran digital and telecoms entrepreneur and is exceptionally well-connected in the telecoms, film, media and digital industries. He founded the Tubedale group in 1989 which are an international telecommunication, project management, software development, and integration practice. Paul is also the Ambassador for Big Data Analytics and Customer Experience for the ™ Forum which, with 900 members, is the largest global trade association focused on bringing together the digital ecosystem. Paul is currently Chairman of Lucid Games, Tubedale Films, Stagereel Films and A&M Wealth Management.

Andy Davidson - Chief Executive Officer

Andy is a software engineer and serial technology entrepreneur. Over the last 20 years he has cofounded numerous technology companies, he still holds directorships in many of them, including Lucid Games and Sentric Music. Along with software engineering. Andy has strong financial experience, raising over £5M in seed venture capital for the companies he has co-founded. In 2017 Andy was recognised by the Sunday Times as one of the UK's top 100 disruptive entrepreneurs.

Alistair Marsden - Chief Marketing Officer

Alistair is both a founder and C-level sales and marketing professional with over 15 years of senior leadership and board experience of starting and growing industry-leading sales brands. He is responsible for oversight of the Nova Group's commercial efforts as well as delivering the Fund Acquisition strategy.

Olivia Greenberg - Chief Growth Officer

Olivia has over 20 years experience establishing and delivering digital business strategy, innovation, transformation and operations. As Chief Growth Officer at Nova, Olivia heads up the business mentor and product management teams, which support all Cofoundery investees to drive growth in the value of the portfolio. Between 1999-2013, Olivia worked with Amaze, one of Europe’s leading digital transformation businesses. During this period, Olivia worked with many well known global brands, and held several roles from programme manager to transformation consultant to operations director, at which point she was directly responsible for the entire delivery portfolio of £10m+ and teams across four offices. Subsequently, Olivia worked as an independent consultant, notably as part of the team that established and ran the digital innovation programme for the London- based Astrazeneca Digital Innovation Group.

Exit strategy

Exits are expected to derive from the usual sources for companies in our field, which means mostly trade sales or replacement capital from VCs. A small number may IPO, but they are expected to be the exception.


Although our method may reduce the proportion, there will still be a meaningful proportion of failures. We intend to apply for these to be struck off promptly to allow investors to claim loss relief as soon as possible.

Fee summary

Fees: All fees apart from the performance fee are charged directly to companies. There are no other fees charged to the underlying investment.


Initial fees: Corporate advisory and arrangement costs

Up to 5% (excl. VAT) - Investee company


Annual fees: Annual maintenance fee

2.0% (excl. VAT**) Investee company


Exit fees: Performance fee 

20% Investor share of proceeds after return of 150% of original capital

Risks

• Investors should note that their subscription will be invested in shares issued by start up and small unquoted investee companies. While the fund aims to diversify risk, the investment is in a highly concentrated asset class of small start up companies and should only form part of a widely diversified portfolio spread across a range of asset classes.

• Given that the investee companies will be at seed stage, it is unlikely that the investee companies will have revenue-generating ability at this time.There is increased risk of failure of start up companies in the current market environment

• It is unlikely that subscribers will have access to their capital for at least 5 years from the date of subscription. Further, the investment is illiquid and there is limited opportunity (if any) to realise the investment early or at market value.

• Due to the nature of investing in small unlisted companies, investors must be aware that their capital invested is at risk

• Tax reliefs currently available under the Seed Enterprise Investment Scheme and Enterprise Investment Scheme and stated investment returns are not guaranteed and may not be delivered. As a result, investors may not receive any tax benefits at all.

• The value of Investee Companies shares may go up or down. An Investor may lose some or all of their investment. The past performance of the Manager is not a guide to the future performance of the investments made through the Fund. 


CAPITAL AT RISK. This is a high risk, speculative, illiquid investment. If investors are unsure as to whether this investment is suitable for them they should seek professional independent advice prior to making an investment

The list in this section is not exhaustive and other risk factors exist. Please refer to the Risk Factors in Section F of the Information Memorandum for further information.

Documents

Only registered investors can access the documents. Receive access by registering for an account.


The content below has been provided by Nova Growth Capital Ltd. Nova Growth Capital Ltd is an Appointed Representative of Sapphire Capital Partners LLP, which is authorised and regulated by the Financial Conduct Authority (FRN 565716).