Newable Private Investing (NPI) has launched a new evergreen EIS fund targeting early stage companies looking to scale.
With an initial raise of £10 million in the first year, Newable Scaleup Fund 3 will help high-growth businesses in knowledge-intensive sectors such as electronics, automation, medtech, and spacetech to bridge the gap between seed and Series A funding as they look to scale up.
The fund targets high-growth early-stage companies that have moved from concept to a working business model but don’t yet have the numbers to attract VC or private equity money.
NPI has come out of Newable’s acquisition of London Business Angels in 2017. Around 1,900 companies that fit its investment profile every year are reduced to a shortlist of 100 presented to NPI’s network of 500 active angels. Out of this, around 20 receive investment. This process has resulted in a failure rate less than half of the average for London startups; one third of previous NPI investments have been deemed a success.
Alexander Sleigh, investment director at Newable Private Investing, said: “Our selection process, which includes scrutiny by our extensive angel network at events throughout the year, is crucial – if you want to pick winning businesses, five hundred brains are better than one.”
Recent exits include Hallmarq Veterinary Imagining, a specialist in advanced diagnostics for horses and companion animals, which yielded five-fold returns when it completed a management buyout led by August Equity in December 2018.
The current NPI portfolio includes Rezatec, a cloud-based analytics platform for satellite data; Sphere Fluidics, which facilitates advanced screening and characterisation of cells for applications in biotech and pharmaceuticals; and Hummingbird Technologies, an agritech company using drones to provide farmers with sophisticated insight into crop development.
Founded in 1982, Newable provides equity, advisory, and lending solutions to around 12,000 SMEs every year.
Chris Manson, CEO of Newable, added: “At Newable, we’ve been supporting young businesses across Britain for more than 35 years … we see their potential, we understand the challenges they face – in particular, the widening gap between seed and Series A – and we are building innovative investment products to help them address those challenges.”
However, EIS analyst Martin Churchill of Tax Efficient Review, said that there has been not much EIS investment to date in startups because they are seen as too risky for most individual investors, and often end up needing another cash injection to keep going.
“Because there are no numbers to show how well startups have done, EIS investors have tended to stay away,” he said.