the science and innovation fund · 2019. 4. 25. · the science and innovation fund is an seis/eis...
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THE SCIENCEAND INNOVATIONFUND
Dr. Farid Khan's 'GFP-Kryptonite' in the bio-reactor was highlighted at the Manchester stand at the MIPIM Exhibition in 2013, pictured with Professor Brian Cox.
© Marketing Manchester 2017. All Rights Reserved.
Risk Warning
SFC Capital Partners Ltd (‘SFC’) is the Fund Manager for the Science and Innovation Fund. SFC are authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom, firm reference number 736284. This document is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The Science and Innovation Fund is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R.
Any decision by an investor to buy shares in a fund must be made solely on the basis of the information and terms contained within the Fund’s offering memorandum. Investment in the Fund is made entirely at the investor’s own risk and professional advice should be sought in case of doubt. The Science and Innovation Fund is an SEIS/EIS fund which raises money for early-stage businesses by investing in SEIS eligible ventures with the aim of returning a profit for investors in the fund. Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. IInvestment in SEIS/EIS funds should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment product will be achieved or that the strategies and methods described herein will be successful. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. This material is confidential and is the property of SFC Capital Partners Ltd. Recipients are deemed to have agreed to treat the information contained herein as confidential and therefore may not disclose, copy, or redistribute such information (in whole or in part) to any person. No warranties or representations of any kind are expressed or implied herein.
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WelcomeWe are proud to launch the Science and Innovation Fund.
The initiative for this unique fund is a collaboration betweenStartup Funding Club (SFC), Simply Capital Partners (SCP), and Manchester’s BiOspace.
SCP’s Chair is the esteemed scientist, Dr. Farid Khan. Through Dr. Khan, his BiOspace team, and his network we have privileged access to some of the best nascent innovations in the bio-medtech sector, emanating from science parks and universities. He has the experience and the facilities, to conduct first-rate due diligence on prospective investment opportunities, their sector, and the competition. Dr Khan is a co-founder of the Science and Innovation Fund.
The Fund allows private investors to be involved in this innovative opportunity to finance the most promising companies in this sector at an early-stage when valuations are reasonable; while benefiting from the generous tax breaks available under the Seed Enterprise Investment Scheme (SEIS) and/or the Enterprise Investment Scheme (EIS).
Bio-medtech is the application of engineering and technology principles to the domain of living or biological systems. It’s a booming industry, last year a record $5.6 billion was raised globally.
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Contents
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Welcome
Risk Warning
Key Facts
Contents
The Startup Funding Club
The Opportunity
BiOspace
Simply Capital Partners
International Advisory Board of Scientists and Academics
Fund Facts
Intelligent Investing atan Early Stage
Mentoring, Tuition andManagement
World class incubator facilities at Manchester Science Partnerships/BioSpace
Investment Sphere
How We Source InvestmentOpportunities
Dr. Khan and his PhD Science Team
Scientific Advisory Board
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Strategic partnerships and relationships as a source of investment opportunities
Investment Exit Strategy,Custodian, Investing in the Fund, Financial Prudence and Social Responsibility
The SEIS Benefits
The EIS Benefits
Further Post Investment Support
Key Risks
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Our Charges
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Potential Investments
Previous investments
About Simply Capital Partners
About Startup Funding Club
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Glossary of Terms
FAQ
Further Information
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Fund Type MinimumInvestment
MaximumInvestment
InvestmentPeriod
SEIS and/or EIS * £5,000 See below **
The Science and Innovation Fund offers investors transparent and straight forward terms.
Next Close 5th April 2018***
Key Facts
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* Subject to individual circumstances. The SFC Fund is also open to investors who do not wish to claim any tax relief on their investments.
** There is no maximum although an individual’s total annual SEIS allowance under income tax and CGT relief is limited to £100,000 and in the case of EIS it is £1m.
***And the 5th April in each subsequent year until the Fund Manager decides to close subscriptions
The Opportunity
The Science and Innovation Fund is an unique and exciting opportunity; the collaboration between organisations and institutions, who each contribute complementary skills and expertise.
The partners in the fund are: an acclaimed fund manager and startups mentor, a positive social impact company funder, a world class incubator facility in Manchester, and a team of science focused ‘bio-entrepreneurs’ and world class science-based academics; all working together to hand pick and nurture only those ventures that offer the highest potential.
The Science and Innovation Fund will invest in a portfolio of between 5 and 10 carefully selected, nascent companies that have already made significant progress in developing solutions to problems.
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Startup Funding ClubFCA regulated Startup Funding Club (SFC) is a leading, multi-award-winning organisation in the world of early stage investments; a team of entrepreneurs, mentors and business angels specialised in sourcing early stage investments and assisting startups in their development. SFC have a track record as an asset manager having launched eight funds to date. Since January 2014, more than £15m in total has been invested in over 100 new start-up and early stage companies across various sectors.
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Simply Capital Partners
Simply Capital Partners (SCP) is dedicated to helping positive social impact businesses grow and flourish. Through its Chair and world respected scientist, Dr Farid Khan, SCP has access to some of the best innovations coming out of UK science parks and universities. Many of these require seeding funding, hence SCP initiated this SEIS fund to provide investors with the opportunity to invest in a portfolio of the most promising early stage companies in the sector.
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BiOspace
A driver for the creation of the Science and Innovation fund is our collaboration with BiOspace, an open access incubator laboratory within the largest science park in Europe, ‘Manchester Science Partnerships’ (MSP).
The Fund’s co-founder and renowned scientist, Dr Farid Khan is based at MSP and is also a co-founder of the BiOspace facility. All of the companies within the Science and Innovation Fund will have access to the BiOspace incubator.
BiOspace access will help nurture new medical advances past the early research and development stage. Here our companies can take advantage of vital, multi-million pound, state-of the art bio-medtech facilities. As well as gaining access to this equipment, they will be mentored and assisted on-site by Dr. Khan’s team of bio-medtech PhD scientists. In addition they can access a library of otherwise expensive medical reports.
Dr. Farid Khan, co-founder of BiOspace welcomes visitors to the new facility at Manchester Science Park.
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International Advisory Board ofScientists and Academics
Our investee companies will all be supported by our panel of ‘bio-entrepreneurs’ from the private sector, as well as academics within a host of top universities and institutions including: Oxford, Cambridge, King’s College London, Manchester University and Manchester Institute of Biotechnology.
Within our group of bio-entrepreneurs some have launched London IPOs and since migrated to NASDAQ and others have exited businesses. Together with our academic members we will be given expert sector and company specific opinion on any businesses we ask them to review. They may offer to join the company management as as an advisory member or mentor to help them reach their milestones. Potential investee companies will be introduced to us as well.
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Fund Facts
Portfolio Approach
Tax Relief
The investor will receive exposure to a portfolio of between 5-10 early stage companies across various sectors.
The fund is FCA regulated and all the companies within it will be pre-approved for either the innovative government backed, tax efficient, Seed Enterprise Investment Scheme (SEIS) or Enterprise Investment Scheme (EIS). The investor can choose to allocate his or her investment between SEIS and EIS (subject to individual circumstances) or to invest 100% of the commitment under either of the scheme. The Fund is also open to investors who do not wish to claim any tax benefits on their investment.
Term of the Fund
Custodian
Bennett Brooks & Co Ltd. will hold the investor’s monies untill they are invested in Portfolio Companies. The Underlying shares will be held in a separate account by SFC Nominees Ltd. but the beneficial ownership in the shares will, at all times, reside with individual investors who will receive the SEIS certificates (one per portfolio company) directly to enable them to claim the appropriate tax reliefs.
Investors should have a long term horizon. It is the intention of the Fund to realize the maximum number of successful “exits” from the portfolio between five and eight years from the date of investment and to distribute cash gains to investors as they are generated.
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Mentoring, Tuition and Management
Bio-medtech companies typically experience a high failure rate due to high financial burn rates and R&D costs, with the average startup spending over 50% of their funding on capital equipment, supplies, and other operational expenses.
The Science and Innovation Fund addresses these issues, for our portfolio companies, head-on.We will not invest your money and then stand back and passively watch. Our early stage companies will be nurtured and mentored continuously throughout their journey.
Our team will help develop our companies’ bio-medtech innovations first hand, and using our BiOSpace suite of state-of-the-art equipment, will physically test their inventions and technological claims in our own laboratories, ahead of clinical trials and also, importantly, before we decide to invest. Due diligence on early stage SEIS investments of this kind is not usual. In addition investors in the Fund are privileged to have access to these exciting opportunities ahead of anybody else.
Our team’s early and continued help will allow our companies to thrive, become commercially competitive and hopefully see them catapult into the market place.
BiOspace is part of the Manchester Science Park where the Bright Building (pictured above), a state of the art workplace, was opened September 2017.
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Intelligent Investing atan Early Stage
“One cannot succeed in innovating in the biopharmaceutical industry, or any industry, if they do not care about the individuals their efforts will eventually help.” Mark Ahn - Biotech Entrepreneur.”
The Science and Innovation Fund will invest in innovative early stage companies. This is when valuations are relatively modest, meaning that meaningful strategic shareholdings are secured.
In some cases, intellectual property created at our partner university, science park, and research institutions will be packaged together with a management team; we will source and create that team, thereby creating brand new company spin-outs. This enables us to intelligently influence, design and evolve the management of these ventures and to ensure that the right expertise, support and governance structures are put in place from the very beginning.
To reflect our initial and ongoing human and resource commitment to all of our investee companies, including: mentorship, incubation, incorporating and SEIS readiness (in many cases), and active management, we intend to take minority equity stakes in the majority of our investee companies. Importantly your interests as investors are aligned with our’s as fund managers. We are positioned alongside you - incentivised to see our companies flourish and increase in value.
“Darwinism may be a fine theory in other contexts, but in startups, intelligent design works best.” - Peter Thiel, Zero to One: Notes on Startups, or How to Build the Future
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Investment Sphere
Biotechnology and Medtech are typically classified by colour-coded sectors: blue is marine based, green is agriculture based, yellow includes nutrition, and red covers diagnostics and pharmaceutical drugs. The Science and Innovation Fund will consider investments from all of these avenues.
Potential portfolio investments may include:
Small molecules drug discovery therapies for cancers, skin disorders and rare diseases Antibiotic drug discovery & developmentNeurodegenerative disease therapeutics inclusive of Alzheimer ’s disease.Diagnostics for cancers, microbial infections and virusesDevelopment of novel biologics and drugs for diabetes, heart disease and autoimmune diseaseBiologically inspired fertilisers - investing in sustainable methodologies Food technologies - functional foods and drinks from omega-3 and antioxidantsDigital Health, IoT with applications in chronic diseases and Smart City initiativesCosmeceuticals - active ingredients from natural products or pharmaceutical formulations towards skin products (e.g. HPV, eczema,dermatitis, psoriasis)
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World class incubator facilities atManchester Science Partnerships/BioSpace
Dr. Farid Khan (more information below) will spearhead and oversee the sourcing of our investee companies; he and his team will also undertake practical day to day management and mentoring of our investee companies. He is based at BiOspace, a joint venture that he co-founded, between Europe’s largest science and technology park operator, Manchester Science Partnerships (MSP) and award winning, Protein Technologies Limited (PTL) of which he is Chair. BiOspace is an open access laboratory providing early-stage bio-medtech companies and bio-entrepreneurs, with low price, no contract, access to facilities, equipment and expertise.
Crucially, the Science and Innovation Fund has the endorsement of MSP and an offer from BiOSpace to house our investee companies; they can take full advantage of the multi-million pound state-of the art bio-medtech facilities there. Additionally they will be mentored and assisted on-site by Dr. Khan’s team of PhD scientists: Tariq Ali, Mark Taylor, Leopoldo Herrera and Laura Righetti.
BiOspace and MSP are a hotbed of innovation - not least because of their proximity to the University of Manchester, Manchester Metropolitan University and the Central Manchester University Hospitals NHS Foundation Trust (CMFT).
Two prominent companies among MSP’s 300-strong community have kindly made their facilities and equipment available to BiOspace companies: Elucid mHealth, which offers expertise in electronics, user interaction and prototyping for medical device design; and LIG Biowise, nanotechnology experts in the biotech sector.
Dr. Khan and his team will be be responsible for oversight of: research and development of products, regulatory approvals, preclinical trials, drug discovery, diagnostic device prototyping, business and management structuring expertise, and importantly the sourcing of non-dilutive innovation grants. Our portfolio companies will be helped with introductions to leaders in their field, access to specialist bio-medtech training courses, and much more.
Head of Innovation at MSP, Anne Dornan fully endorses the Science and Innovation Fund:
“Manchester Science Partnerships is thrilled to work with the Science and Innovation Fund - often early stage funding is the most difficult to get but equally the most lucrative for investors”“Incubating start-ups within BiOSpace will allow much needed cash to go a long way, helping companies to achieve their goals.” 14
Dr. Khan andhis PhD Science Team Dr. Farid Khan
Dr. Farid Khan is a ‘bio-entrepreneur’. As well as being an award-winning scientist, he’s an active deal maker, facilitator and mentor within the bio-medtech space.
He has an enviable network of contacts within both the international investor community and the science world. As a visionary leader and respected scientist, Dr. Khan has formed key collaborations within industry, academic institutions and charities. These long-standing partnerships have helped form strong start-up teams and fuelled innovation.
Dr. Khan has a PhD from the University of Cambridge in protein folding and has extensive experience in drug discovery acquired working at GlaxoSmithKline. He has subsequently been involved in developing drugs for rare diseases and imaging agents for cancer diagnosis and treatment.
He is based on a daily basis within BiOspace which he is co-founder of, in the heart of Manchester’s Science Park. As such he is ideally positioned to pinpoint and evaluate potential compelling investments for the Science and Innovation Fund, and then help mentor and monitor their performance. He has tried and tested the many channels for obtaining grant funding for growing companies; he and his team will be very much hands on with helping our investee companies reach their goals.
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Dr. Khan and his PhD Science Team
Dr. Tariq AliDr. Ali has over 20 years of experience in protein chemistry and molecular biology. He obtained his PhD from the University of Cambridge, where he worked on DNA-protein interaction. Subsequently, Dr. Ali conducted his post-doc research at the University of Oxford, where he studied the functional and structural characterisation of specific members of the TGF-beta superfamily of proteins. He has been involved in the development of targeted imaging agents for cancer diagnosis and treatment.
Dr. Laura Righetti
Dr. Righetti holds a degree in Biotechnology and a PhD in Agri-Food Sciences, Technologies and Biotechnologies. Her expertise covers the fields of molecular biology, functional genomics and analytical chemistry, mostly applied to the study of plant pathology and defence mechanisms. She has also taken part in projects aimed at developing products for the nutraceutical industry and the agriculture sector.
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Dr. Khan and his PhD Science Team
Dr. Mark TaylorDr. Taylor obtained his BSc (Biotechnology) and PhD (Molecular biology and Biochemistry) from Sheffield University and has worked at Leicester and Lancaster universities. His scientific career has involved a number of different biomedical subjects including drug metabolism, protein structure and function, drug testing in protein aggregation disease and biomarker development in dementia. Currently, he is working on a biomarker test for multiple system atrophy (MSA) using whole blood in partnership with CynapseDX and funded by the ManxMSA Trust.
Dr. Leopoldo Herrera
Dr. Herrera has a PhD in Biotechnology from the University of Manchester, an MSc in Biotechnology and Enterprise and a degree in Biotechnology Engineering. He is an expert in microalgae biotechnology and has worked in this area in industrial and academic settings for the last six years. He has a great interest in bio-entrepreneurship, product development and translational science and recently worked as an Enterprise associate for the University of Manchester Intellectual Property (UMIP). As COO, he has been involved in many of the R&D collaborations between the partners of BiOspace.
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How We Source Investment Opportunities
In addition to our partnerships with MSP and BiOSpace we will source investments from a number of ‘innovation funnels’ using our collective network and partnerships with leading innovation centres of excellence. We have two main avenues : (1) The Science and Innovation Fund Scientific Advisory Board, and the various institutions and industries they represent, and (2) Strategic partnerships and relationships.
1) The Science and Innovation Fund’s Scientific Advisory Board
Our impressive team of advisors will collaborate and work with Dr. Khan, helping to both source and nurture our investments at all stages of their development. The combined experience and network of these professionals will give these companies the best possible chance to develop their potential and become profitable.
Our panel includes bio-entrepreneurs from successful UK and European companies, and highly regarded academics from King’s College London, University College London, University of Cambridge, Oxford Science Park, Manchester Institute of Biotechnology and University of Manchester Intellectual Property. Meet the board.
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Scientific Advisory Board
Professor Gino Martini - King’s College, London
Professor Martini is a bio-entrepreneur. He has worked closely with Startup Funding Club as a trusted advisor for several years. Currently, Professor of Pharmaceutical Innovation at King’s College London, he is also Director of Rainbow Medical Engineering. He held the role of Senior Director of Preclinical and Pharmaceutical Development for Emerging Markets and Asia Pacific at GlaxoSmithKline. He has researched the development of dosage forms, and the design and successful implementation of technological platforms.
Professor Martini is a Pharmacist and received his PhD in Drug Delivery from the University of Manchester. He gained an MBA with Distinction from the University of Liverpool, specialising in SME business failures and successes.
Gino was made visiting Professor at John Moores University of Liverpool in 2006 and designated a Fellow of the Royal Pharmaceutical Society in 2008. He was appointed a member of the REF2014 sub-panel for Pharmacy, Dentistry, Nursing and Allied Healthcare professionals in 2011. He has 10 patents and over 35 papers published in the field of Drug Delivery, Formulation and Innovative technologies.
“I’ve enjoyed being Scientific Adviser to Startup Funding Club for a few years now; working with science related companies that they’ve either raised funds for already, or doing due diligence on prospective investments.. With my combination of private sector and academic pharmaceutical experience I am looking forward to collaborating with Dr. Khan in helping new and exciting bio-medtech companies grow into the giants of tomorrow”
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Dr Brian Whittle, MSc, PhD, FRPhS, B Pharm, MSc,PhD - Co-founder GW Pharmaceutical Plc
Dr Brian Whittle is a close friend of Fund Director, Dr. Farid Khan. He co-founded GW Pharmaceuticals Plc in 1998 and served as its Scientific Director until March 2008. GW Pharmaceuticals makes medicines from marijuana, and is listed on the NASDAQ Global Market (GWPH) and is currently worth over £3 billion. Dr Whittle has 40 years experience in the pharmaceutical industry. He co-founded Phytopharm PLC and served as its Chief Executive from 1990 to 1994 and Chief Scientific Officer from 1994 and 1998. Dr Whittle also founded Brian Whittle Associates Ltd, and has held senior positions at Wyeth Europa Ltd, Reckitt and Colman plc, and ICI Pharmaceuticals Ltd.
“I founded what is now a NASDAQ listed company, but it was just a start-up in 1998. Dr. Farid and I working to support new start-ups and the new Science and Innovation Fund is an excellent vehicle for investors. I’m very much looking forward to helping small but growing UK bio-med and technology businesses thrive.”
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Scientific Advisory Board
Dr Oleg Werbitzky - Logscale Venture Partners, Switzerland
Logscale VP concentrates on start-ups and growth stage companies with disruptive technologies in the healthcare space. Dr. Oleg Werbitzky successfully pioneered, built, acquired and developed significant businesses for multinational companies in the life sciences and FMCG sectors. He was formerly Director of Innovation at Lonza, Switzerland and has a substantial experience with modern innovation management concepts, like Open Innovation, Design Thinking, Business Model and Lean Innovation, and with modern strategic approaches like Blue Ocean Strategy.
A Doctor of Natural Sciences (Technical University Munich), Oleg is a co-inventor of 20 international patents and patent applications, and author of more than 15 scientific publications. Trained in Finance for Executives by INSEAD.
“Farid and I work on adding value to bio-medtech startups and we look forward to supporting ventures which have a large unmet need”
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Scientific Advisory Board
Dr. Ian Smith, MBE - Former Global Medical Director of Synexus
Dr Ian Smith is the Founder of Synexus, the Global Leader in recruitment of patients into Clinical Trials. Dr Smith started Synexus in 1992 after a career in General Practice. He was awarded an MBE in 2012 for services to medical research. Synexus has 26 research centres in nine countries across Asia, Africa and Europe.
“I founded Synexus in 1992 and it was sold for £178m to PPD -a contract research organisation- so I know the journey very well. I am now identifying technologies which can be game changers in clinical trials and look forward to working with Farid on this”
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Scientific Advisory Board
Simon Hubbert - MD of Oxford MedTech Consulting
Simon Hubbert the MD of Oxford MedTech Consulting based at Oxford Science Park. Simon is a former healthcare professional with over 25 years international experience in the medical device industry. Simon was most recently CEO of Lombard Medical (NASDAQ: EVAR) a company in the vascular surgery space. During his tenure at Lombard Simon oversaw US FDA and Japan PMDA approval for their lead product Aorfix™, executed a NASDAQ IPO which raised $55m for the company and led the acquisition of Altura Medical, a pre revenue stage company from California.
“I see many breakthrough innovations which unfortunately do not receive that vital seed funding and these just wither and die. The Science Fund will enable these innovations to flourish and I will certainly forward any new opportunities as they arise.”
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Scientific Advisory Board
Mi-IDEA (www.mi-idea.com)
Innovation Digital Enterprise Alliance (Mi-IDEA) is an innovation centre located at the heart of Manchester Science Partnerships, where start-ups can grow in confidence and capability. It offers a carefully crafted programme providing one to one support and mentorship. It is sponsored by MSP and Cisco. They do not provide funding though so this is a ready source of potential good quality investments.
INNOVA (www.innova-us.net)
INNOVA is a strategic partner to the Science and Innovation Fund which will introduce innovation and spin out companies from Europe into the UK. INNOVA is an international business accelerator advisor and supports technological innovation through the creation of new UK, U.S. and EU partnerships. INNOVA also has strategic company ventures in UK, France, Luxembourg, Belgium, Poland, and Spain.
MedTech Centre (www.medtechcentre.co.uk)
The MedTECH Centre Incubator is a business incubator for innovators who are developing technology which can help the NHS to provide high-quality, efficient care to its patients; a first joint venture between the NHS (Central Manchester University Hospitals NHS Foundation Trust & TRUSTECH) and the private sector (Manchester Science Parks) with the objective of stimulating the growth of successful healthcare technology companies.
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Strategic partnerships and relationships asa source of investment opportunities
Manchester Institute of Biotechnology (www.mib.ac.uk)The Institute is home to approximately 47 Research groups with over 500 staff and students. It is designed to enable academic communities to explore specific areas of interdisciplinary quantitative bioscience, largely through the efforts of multidisciplinary research teams.
ReThinkX (www.rethinkx.co.uk)
ReThinkX is inspiring a new generation of healthcare innovators by providing an entirely free and universally accessible platform for events, content and discussion. ReThinkX exposes students and young professionals to the latest health care advances and facilitates interactions between them and the thought leaders of today.
LOGSCALE (www.logscalevp.com)
LOGSCALE is a source of potential investments. They concentrate on start-ups and growth stage companies that address unmet needs in the healthcare space. They collaborate with pharma, medtech, biotechnology and life science companies and pursue opportunities in the adjacent fields of personalized medicine, diagnostics and e-health.
GIANT - G lobal I nnovation a nd N ew T echnology (www.gianthealthevent.com)
Dr. Farid is a founding partner of GIANT; both he and Startup Funding Club CEO, Stephen Page have a working relationship with GIANT management. Established as the global gathering for everyone involved in health-tech innovation, GIANT showcases leading health-tech from round the world, with a 3 day business/science/academic event. 26
Strategic partnerships and relationships asa source of investment opportunities
This is a selection of companies that our team have already helped both raise funds for, and nurture on their development journey. The companies are for illustration purposes only and are not the companies that the Science and Innovation Fund will be investing in. They give a taste of the type of investment that could feasibly be included in the portfolio, and how they could grow.
Elucid mHealth (www.elucid-mhealth.com)
Elucid was created in October 2013 from the ideas of two entrepreneurs: Graham Howieson, with pharmaceutical packaging experience and Dr. Farid Khan with pharmaceuticals and drug development expertise. The problem in clinical trials is that there is no way of knowing whether patients using experimental drugs are actually taking their medication at the right time and in the correct dosage (called medication adherence). The solution was to create an ‘electronic dispensing bottle’ which monitors the patient’s medication regime and reminds them if they have forgotten to take their dose.
Clinical trials are a billion pound industry (an average clinical trial costs £40 million) with the medication non-adherence costing up to 30% of a typical trial. During 2013-15, Dr. Khan using his expertise applied for several grants , successfully raising non-dilutive funds from local Manchester based funds: GMAHSN (£45k), NHS-testbeds award (£55k), Corridor Growth Fund (£45k), and also a loan from Business Finance Solutions (£50k). Dr. James Burnstone was recruited in 2015 as a recent PhD-graduate in microelectronics from The University of Manchester to head the the hardware and software development.
Within a year, the team created the prototype electronic bottle which transmitted through Bluetooth to ordinary smartphones. In 2016, this milestone prompted Dr. Khan to present Elucid to his investor contacts for seed funding; a High Net Worth Individual and an SEIS specialist/VC investor, Deepbridge Capital invested SEIS funds at a pre-money valuation of £2 million. Dr. Burnstone was made CEO and Dr. Ian Smith who had previously exited a clinical trials company called Synexus for £178 million was made Chair.
During 2016-17, Elucid worked in partnership with one of the largest clinical packaging companies in the world and in September 2017 received Series A investment, this time from Catapult Ventures together with a private investor; this increased the company’s valuation to £5 million (the founders holding just over 20%
Previous investments by theScience and Innovation Fund team in the bio-medtech sector
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Previous investments by theScience and Innovation Fund team in the bio-medtech sector
Clinova Ltd.
Clinova was co-founded by alumni from the School of Pharmacy at University of Portsmouth. The company identifies, develops and markets innovative, efficacious and cost-effective pharmaceutical and consumer healthcare products. Simply Capital Partners first started working with the company in 2013, helping them raise most of the Series A funding round of £1m on a pre-money valuation of £4m. At that stage the company had one product - ORS, for hydration. Faizal Karbani, MD of Simply Capital Partners, was appointed to the company’s Advisory Board and held the position of interim CFO until a permanent full time person was found. Since 2013 the company has expanded adding another 3 products and now distributes in more than 20 countries. More recently Simply Capital Partners helped the company raise a significant proportion of the £4m raised in their Series B funding round at a pre-money valuation of £16m.
of shares). At this stage the founders passed over control of the company so that they could concentrate on incubating other ventures.If Elucid’s clinical trials are successful, the company is poised to increase its valuation 10-20 fold. As an example, Propeller Health (http://propellerhealth.com/) is focused on asthma and COPD real time monitoring using a Bluetooth device, mobile application and cloud system. Founded in 2012, currently they have received a total of $26.46m. In September 2015 they gained FDA approval, (resulting in their series B funding of $14.5m). They have now partnered with GSK. eLucid’s technology is an adherence monitoring system for solid dose medicines whereas Propeller’s technology is focused on inhalers.
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Potential investments on our radarfor the portfolio - 2 examples
A urinary Tract Infection companyThis diagnostic venture has been developed for over 5 years (UK SEIS enabled company now). UTIs are some of the most common bacterial infections, affecting 150 million people each year worldwide. The invention is a simple colour test that indicates an infection with 95% certainty and allows you to use the correct antibiotics to treat the patient.
An Alzheimer’s drug companyCurrently there is no medical treatment for the disease and it is estimated that a drug that could even delay the onset of Alzheimer’s by a few years would be worth trillions. This venture uses ‘repurposed drugs’- ones already used for other conditions, and repositions them to try and combat Alzheimer’s disease. The advantage is that repurposed drugs can be fast-tracked into human trials. This year the company secured three repurposed drugs which can be used directly to Phase 2 trials.
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A Cancer Drug CompanyA biotechnology company that develops personalised medicines to treat cancer. Therapies are co-developed with companion biomarkers to target the specific drivers of cancers. One drug that has already been developed to a late pre-clinical stage, at a cost of over £10M, is a novel innovative therapy for the treatment and prevention of breast cancer & other hormone-dependent cancers.
About Startup Funding Club (SFC)
CEO Stephen Page, an experienced entrepreneur himself, understands how to nurture young businesses and help turn them into the successful companies of tomorrow. He established SFC in 2012; he and his team were recently crowned Best Angel Syndicate at the Growth Investor awards in November 2017. This added to their trophy cabinet, having won Lead Syndicate of the Year Award 2016 granted by the UK Business Angels Association.
Nascent companies need more than just money, and the SFC team provides portfolio companies with an ecosystem of support services through its network of partners, advisors and angel investors; this ensures that companies receive help with their finances, legals, marketing, and distribution strategy. SFC is a FCA regulated company.
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About Simply Capital Partners
Faizal Karbani has built a team at Simply Capital Partners with solid commercial and financial experience, boasting a superb national and international network within business and investor communities, with a real passion and desire to help businesses grow and flourish. The ethos of the company is to help raise funds for, and mentor businesses, that act responsibly and can make a positive difference to people’s lives. This is what attracted Dr Farid Khan to join the company in 2016 as Chair. Faizal explains why the Science and Innovation Fund in conjunction with Startup Funding Club was formed:
“Through Dr Farid and his networks we have privileged access to some of the best innovations coming out of UK Science Parks and universities. Having an SEIS/EIS fund was the most effective and efficient way of raising seed capital for the relatively young, incredibly promising opportunities coming through. It gives our investors a diversified portfolio to invest in and it enables us to raise money for a number of companies at one time rather than individually. Partnering with Startup Funding Club was a perfect match as they are specialists in seed funding, have built a great reputation and track record in this space and are already FCA regulated SEIS and EIS fund managers”
Simply Capital Partners: Founder: CEO Faizal Karbani, and Chair Dr Farid Khan
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Investment Exit StrategyInvestors should have a long term horizon. It is the intention of the Fund to realize the maximum number of successful “exits” from the portfolio between five and eight years from the date of investment and to distribute cash gains to investors as they are generated.
CustodianBennett Brooks & Co Ltd will hold the investor’s monies until they are invested in Portfolio Companies. The underlying shares will be held in a separate account by SFC Nominees Ltd but the beneficial ownership in the shares will, at all times, reside with individual investors who will receive the SEIS/EIS certificates (one per portfolio company) directly to enable them to claim the appropriate tax reliefs.
Investing in the FundInvesting in the Science and Innovation Fund enables passive professional investors to gain exposure to a portfolio of SEIS/EIS Qualifying Companies. To subscribe to the Fund, investors are requested to complete and return the Fund’s Application Form including the Client Suitability and Appropriateness questionnaire.
Investors’ monies will be invested in a portfolio of between 5 and 10 early stage companies. We will provide a quarterly report to Fund investors detailing their individual Investment Portfolio including progress reports on companies within their portfolio.
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Financial Prudence and Social ResponsibilityExcessive debt or leverage can be damaging for any young company so we have placed restrictions on the amount of interest bearing debt that any company that the Fund invests in can take on. Companies must seek the permission of the Fund to enter into any debt agreement; there is a also a ceiling set at 30% of the company’s total assets.
The Fund will only commit capital to businesses that our investment committee deem to have a positive social impact; we will not invest in companies that pose a risk to society or the environment.
The Science and Innovation Fund has a simple, performance based fee structure.
The Science and Innovation Fund differs from many other fund offerings because of the high level of guidance, advice and practical help that our team will give our investee companies for years to come. To help partially cover our ongoing administrative and management costs we ask for a competitive one-off 2% (+VAT) payment at the time of making their SEIS/EIS investment.
The Fund Manager retains the right to charge upfront arrangement and/or ongoing fees to companies in which the Fund invests. Value Added Tax will be charged where applicable.
Performance Fee
20% of Returns
Only payable once you have received
back the full amount of your original
investment.
2% (+VAT) Initial Fee
NoAnnual
Management Fee
Alignment of interests with
investors.
Our Charges
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[not including 2% (+VAT) initial one-off management fee]
The SEIS Benefits
Conditions apply. Taxation depends on the individual circumstances of the investor and may change in the future. Potential Investors are recommended to seek independent financial and tax advice before committing.
£-10,000
£-5,000
£0
£5,000
£10,000
£15,000
£20,000
Value
Time
Year 0
InitialInvestment
within12 months
after3-7 years
Capital at Risk
50%
27.5%
22.5% or
CGT-FREEReturn on
Investment
In addition :
- 100% Inheritance Tax Relief (after 2 years holding)- CGT reinvestment relief: potential exemption of 50% of an existing CGT bill
* Loss relief against income tax of 45%[not including 2% (+VAT) initial one-off management fee]
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Income Tax Relief
Loss Relief* After tax reliefs, top rate tax payers risk only 27.5% of their investment**
The EIS Benefits
Conditions apply. Taxation depends on the individual circumstances of the investor and may change in the future. Potential Investors are recommended to seek independent financial and tax advice before committing.
£-10,000
£-5,000
£0
£5,000
£10,000
£15,000
£20,000
Value
Time
Year 0
InitialInvestment
within12 months
after3-7 years
Capital at Risk
30%
38.5%
31.5% or
CGT-FREEReturn on
Investment
In addition :
- 100% Inheritance Tax Relief (after 2 years holding)- CGT deferral relief: potential unlimited and indefinite deferral of an existing CGT bill
* Loss relief against income tax of 45%[not including 2% (+VAT) initial one-off management fee]
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Further Post Investment Support
SFC is itself an entrepreneurial organisation and understands the need to bring value beyond funding. SFC has put in place strong partnerships with leading firms providing services from legal to marketing services.
Insurance Bookkeeping & Accounting
Promotion InnovationGrants Access
IP Bookkeeping & Accounting
Promotion InnovationGrants Access
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Key RisksInvestment RiskThe Fund will primarily invest in either identified start-ups or known early stage opportunities. This focus increases both the risks and the potential rewards for Investors. Potential Investors are recommended to seek independent financial and tax advice before committing. Please note that an investment in the Fund is speculative and the Fund Manager is unable to provide you with advice about whether you should commit to the Fund.
• The SFC Fund Portfolio will comprise investments in unquoted companies that are start- up or small, early stage businesses or similar, and unlikely to be profitable or cash generative at the time of investment and, as such, have to be viewed as carrying a higher than average level of risk. The market for their shares is illiquid and uncertain by its nature. This results in a higher level of risk than a portfolio of quoted shares.
• Investments in SEIS/EIS Qualifying Companies are not publicly traded which may mean that immaculate / proper information will not be available to determine the current investment value. Investing in such products need to be thought carefully whether you can afford this investment or not and if this kind of investment is the best its kind – external consultation may be advisable. You should be prepared to exit the investment intact for significantly longer than three/five years.
• The value of shares can go down as well as up and this could result in an Investor incurring a partial or total loss of his or her Commitment. A potential Investor that cannot afford to lose all of his or her Commitment to the Fund should not consider committing.
• There is no guarantee that the valuation of shares in a Portfolio Company will fully reflect their underlying net asset value or that
the shares may be acquired or disposed of at that valuation, or at all.
• The past performance of any investment(s) is not to be regarded as an indication of the future performance of that or any investments made by the Fund. No guarantee is given as to the performance of investments made by the Fund or the level of capital gains or income that will be generated by such investments. There can be no guarantee that the commercial objectives of the underlying Portfolio Companies will be achieved.
• The unquoted companies targeted by the Fund will have small management teams and are highly dependent on the skill and commitment of a small number of individuals.
• Smaller unquoted companies requiring more than one round of additional equity of the type provided by the Fund commonly experience significant change and carry higher risks than investments in larger or more established businesses.
• Technology or scientific research related risks may be greater in small, unquoted companies, although this may be justified by the potential for significantly higher returns from such investments.
• The Fund may be the holder of minority interests in Portfolio Companies and accordingly may have little or no ability to influence how the business of that company is conducted. This may also include sale of a Portfolio Company within the three year holding period if the financial gain is deemed attractive, and, although considered unlikely, a revocation of SEIS/EIS status or adverse shareholder rights being imposed by a later investor.
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Key RisksTaxation Risk• Rates of tax, tax benefits and allowances described in this Information Memorandum are based on current legislation and HM Revenue & Customs practice. These may change from time to time and are not guaranteed. This investment may not be suitable for all investors. Startup Funding Club does not provide advice and potential investors are recommended to seek specialist independent tax and financial advice before investing. The Fund has been designed with UK-resident taxpayers in mind. If you are not resident or ordinarily resident in the UK for tax purposes, it may not be appropriate or advantageous for you to invest in this fund.
• It is the intention of the Fund Manager to make investments in identified unquoted companies that are qualifying under current SEIS/EIS legislation at the time of investment. However, the Fund Manager cannot guarantee that all Investments will continue to qualify for any SEIS/EIS Tax Relief or indeed the continued availability of SEIS/EIS Tax Reliefs to the investor relating to any individual Investment.
• The sale or other disposal of shares in a Portfolio Company within the period of three years following their issue will result in any income tax saved from making of the Investment becoming payable to HM Revenue & Customs.
• The levels and bases of reliefs from taxation may change or such reliefs may be withdrawn. The tax reliefs referred to in this document are those currently available and their value depends on the individual circumstances of investors initially and throughout the holding life of the Investments.
• The dates on which initial SEIS/EIS Tax Relief and Capital Gains Tax Relief are available are known only when the Fund makes its underlying investments. Any delays in investment into the Fund’s Qualifying Companies may have a “knock on” effect on the opportunity to defer capital gains tax on an earlier disposal.
• The ability of the investor to obtain the tax reliefs referred to in this document is subject to the investor making the proper claims to HM Revenue & Customs within the requisite time limits and the investor may lose such reliefs if the relevant claim is not so made.
• The Fund Manager will not normally take into account the individual tax positions of investors and therefore the actions of the Fund Manager or Portfolio Companies could give rise to a partial loss of the Investor’s SEIS/EIS Tax Relief or other tax advantages.
• An investor should be aware that SEIS/EIS Tax Relief and Capital Gains Tax Relief is only available on the amount actually invested on his or her behalf in Qualifying Companies, not on the total amount of his or her Commitment to the Fund.
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Glossary of TermsAIM The Alternative Investment Market of the London Stock Exchange.
Application Form An application form to invest in the Fund in the form provided by the Fund Manager.
Applicable InvestorProfessional clients only.
Client Suitability and Appropriateness QuestionnaireThe questionnaire to be completed by each Investor, which accompanies the Application Form.
Capital Gains Tax Reinvestment ReliefRelief from CGT (section 5B of the Taxation of Chargeable Gains Act 1992).
Closing Date The Closing Dates is 31st March 2018.
Commitment An amount of money subscribed to the Fund by an Investor on signing the Application Form.
FSMA The Financial Services and Markets Act 2000 (as amended).
FCA The Financial Conduct Authority.
FCA Rules The rules contained in the FCA’s Handbook of Rules and Guidance as amended from time to time.
Fund Science and Innovation Fund, also referred to as the SFC Fund.
Fund Manager or ManagerSFC Capital Partners Ltd.
Fund Management Agreement The Fund Management Agreement to be entered into between the Investor and SFC Capital Partners Ltd as the Fund Manager as summarised in this document and a copy of which is appended to the Application Form.
Gross Commitment (or Subscription) An amount committed by an Investor on signing the Application Form.
HMRC HM Revenue and Customs.
Income Tax Relief An amount to be set off against an Investor’s liability to pay income tax.
Information Memorandum This Information Memorandum for The SFC Fund
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Glossary of TermsInvestee Company A company in which the Fund Manager makes an Investment on behalf of the Investors.
Investment Period The period during which an Investor’s Commitment is deemed to have been received.
Investor A person who completes an Application Form to invest in the Fund which is accepted by the Fund Manager, who completes a Client Suitability and Appropriateness Form and who enters into a Fund Management Agreement with the Fund Manager and thereby makes a Commitment to the Fund.
Nominee Startup Funding Club Nominees Limited (which is a subsidiary of the Fund Manager).
Non Readily Realisable Investment Investments which are not Readily Realisable Investments and in which the market is limited or could become so; they can be difficult to deal in and it can be difficult to assess what would be a proper market price for them given there is no secondary market.
Performance Fee The Performance Fee payable to the Fund Manager as mentioned in this Information Memorandum and more fully described in the Fund Management Agreement.
Portfolio In respect of an Investor, the investments made through the Fund which are allocated to him or her and which are registered in the name of the Nominee as nominee for that Investor. In respect of
the Fund, the group of companies that receive investment from the Fund.
Portfolio Company A company that has received investment from the Fund.
Previous SFC Funds The SFC team has previously collaborated on the following SEIS funds since 2014: Funding Alpha 2014, Startup Funding Club 2015 SEIS Fund, Startup Funding Club 2016 SEIS Fund, Fintech 2016 SEIS Fund, Odyssey Mission SEIS Fund, Startup Funding Club SEIS/EIS Fund and the EPICURE SEIS Fund.
SEIS/EISSeed Enterprise Investment Scheme or Enterprise Investment Scheme as set out in Chapter 4 of Part 5A Income Tax Act (ITA 2007).
SEIS/EIS Qualifying Company A company which is a qualifying company for SEIS/EIS purposes.
SEIS/EIS Tax Relief Relief from income tax and CGT payable under the appropriate SEIS/EIS legislation.
SFC Fund Qualifying Company A company which is a qualifying company for SFC Fund purposes.
SEIS/EIS Tax Relief Relief from income tax and CGT payable under SEIS/EIS legislation. as set out in Chapter 4 of Part 5A Income Tax Act (ITA 2007).
VAT Value added tax. 40
FAQWho can invest in our fund?The underlying investments having a very high risk profile, the SFC fund is only open to professional clients as defined by the FCA who understand the dynamics of early stage companies and are prepared to invest in acceptance of the risk- reward argument. Potential investors will be required to complete a Client Suitability and Appropriateness form, which accompanies the Application Form, prior to making a commitment.
How can I invest in the fund?An Application Form and a copy of the Fund Management Agreement are available on request from the Fund Manager. The form should be completed in full and returned to the Fund Manager plus a cheque or a completed telegraphic transfer for the amount subscribed.
How much money can I invest (min and max amount)?The minimum investment amount is £5,000. There is no maximum although an individual’s total annual SEIS allowance under income tax and CGT relief is limited to £100,000, and in the case of EIS it is £1m.
What kind of portfolio will I own?Investors will receive an exposure to a portfolio of 5-10 early stage companies in the bio-medtech sector.
How quickly will my money be invested?Our intention is to fully invest your funds in portfolio companies before the end of the Investment Period so that investors can claim their relevant tax reliefs as soon as practicable.
Can I invest in the fund through my company?Yes, however the SEIS/EIS tax benefits apply only to individuals.
How are gains realised?The realisation of gains for investors is typically achieved through “exits”, i.e. the trade sale or (less commonly) the public listings of some of the portfolio companies. These liquidity events are typically occurring at a time when the portfolio company has achieved exceptional growth and increased its valuation significantly, thereby providing the Fund’s Investors with a multiple tax free return.
What return on investment should I expect?There is a lack of data on the performance of angel investments as they are private “deals” made by individuals which fall outside of any reporting requirement. Some studies have shown that on average, angel investments as an asset class seem to generate attractive returns with an overall return on investment is 2-2.5 times the original capital committed.
However these numbers need to be put in perspective and although it is the intention to generate attractive returns for investors, this cannot be guaranteed due to the high risk associated with this type of investment. In particular, your attention is drawn to section the Specific Risks described in the fund’s Information Memorandum.
What is the lifetime of the fund?It is the intention of the Fund to realise the maximum number of successful “exits” from the portfolio between five and eight years from the date of investment in order to distribute cash gains to investors. Note that there is a minimum holding period of 3 years for SEIS investments.
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FAQWhat is your experience with SEIS/EIS funds?The SFC team has previously collaborated on the following SEIS funds since 2014: Funding Alpha 2014, Startup Funding Club 2015 SEIS Fund, Startup Funding Club 2016 SEIS Fund, Fintech 2016 SEIS Fund, Odyssey Mission SEIS Fund, Startup Funding Club SEIS/EIS Fund and the EPICURE SEIS Fund.
What are the ongoing fees?There are no ongoing fees.
Who manages the fund?SFC Capital Partners Ltd will be the Fund Manager of the Scienceand Innovation Fund with exclusive responsibility for decidingupon the investment strategy and each individual investment.
What are the risks that I should be aware of?An investment in the Fund is subject to a number of risks. Before making any investment decision, prospective investors should consider carefully the risks attaching to an investment in the Fund together with fully reviewing all other information in particular, the risk factors described on the Information Memorandum. This information does not purport to be exhaustive.
Additional risks and uncertainties not presently known to the Fund Manager, or that the Fund Manager currently deems immaterial, may also have an adverse effect on the businesses of the Investee Companies.
Potential investors should consider carefully whether an investment in the Fund is suitable for them in the light of the information in this Information Memorandum and their personal circumstances.
How do I claim the SEIS/EIS tax benefits?The SFC Fund will invest only in SEIS/EIS qualifying companies and thereby allow qualifying investors to claim tax relief in respect of either the current tax year or carry back to the prior tax year for the amount invested in each of the qualifying companies.
Startup Funding Club will work with the Investee companies to provide investors with the SEIS3 and/or EIS3 certificates needed to claim the corresponding tax reliefs. Taxation treatment depends on the individual circumstances of the Investor.
Who will own the shares in the underlying companies?The shares in which the Fund’s cash is invested will be subscribed for, issued to and held by the Fund Manager’s nominee company, in a designated account and acting as nominee for the Investor and all Investors.
However, each individual investor will at all times remain the beneficial owner of the shares in the portfolio companies which correspond to his or her investment.
Can I select my own portfolio of companies?No. The selection is made by the Fund Manager.
How can I mix my investment between SEIS and EIS?Investors in Science and Innovation Fund can invest either exclusively in SEIS or EIS companies. Alternatively, Investors may commit to a blend of SEIS and EIS qualifying companies. The EIS portfolio will typically comprise companies that are more advanced in their development than those in the SEIS portfolio.
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FAQAm I going to be paid dividends?Given the nature of the underlying companies, SFC does not anticipate that any Investment will yield a dividend. In the unlikely event that dividends are received from any Investee Company, these will be distributed to Investors as soon as practicable a er receipt. Any income received on shares held through the Fund may be subject to income tax in the hands of an investor.
Should I consult my wealth manager/financial advisor before investing?If you are in any doubt, you should not invest in the Startup Funding Club Science and Innovation Fund without having first taken personal financial advice as to its appropriateness and suitability for you as an investment from your stockbroker, authorised financial intermediary (such as an IFA), bank manager, solicitor or other person authorised by the FCA.
How do you work with portfolio companies?Startup Funding Club will provide post investment monitoring and support to all portfolio companies and will use its network of investors and partners to actively help the growth of companies.
Is it possible to withdraw my money from the fund?Investors are entitled to withdraw in full (but not in part) from the Fund at any time. Investors who withdraw from the Fund inside three years will lose therelevant EIS/SEIS reliefs and may incur external transaction and exit costs from such a withdrawal.
Given the nature of the underlying Investments in the Fund i.e. shares in unquoted companies, and a commitment (other than in the initial closing) to invest fully by each subsequent Closing Date, it is unlikely that there will be sufficient cash in the Fund to make any repayment or even part repayment in cash.
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Further InformationFor further information about The Science and Innovation Fund, please contact
either Startup Funding Club, Simply Capital Partners or BiOspace.We will be happy to answer your questions.
Fund ManagerSFC Capital Partners
Limited1-6 Speedy Place
Cromer StreetLondon
WC1H 8BU
www.startupfundingclub.comPhone : +44 (0) 20 7060 7052
Mail : [email protected]
Simply Capital PartnersThe Station Masters
House168 Thornbury Road
Osterley VillageLondon
TW7 4QE
www.simplycapitalpartners.comPhone : +44 (0) 20 8945 3786
Mail : [email protected]
BiOspace
Greenheys (Units 33&34)Pencroft Way
Manchester Science ParkManchester, M15 6JJ
www.biospaceuk.comPhone : +44 (0) 161 226 2366Mail : [email protected]
Regulated by the Financial Conduct Authority. Reference number: 736284