Seismic Foundry SEIS Fund 2017/8. Information Memorandum

Transcription

1 Seismic Foundry SEIS Fund 2017/8 Information Memorandum Issue Date: 21 November 2017

2 Risk Warning Seismic Foundry Ltd and the five co-founders have been approved as Appointed Representatives by SFC Capital Partners Ltd. SFC Capital Partners Ltd ( SFC ) is authorised and regulated by the Financial Conduct Authority ( FCA ) in the United Kingdom, firm reference number 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 Seismic SEIS 2017/2018 Fund (the 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 R. 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 Seismic Foundry SElS 2017/2018 Fund is an SEIS 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. Investment in SEIS 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 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.

3 Welcome Seismic Foundry Partners are a team of Capital Markets professionals and investors leveraging our experience and networks to develop and grow FinTech. At Seismic Foundry we understand how to find promising early stage Capital Markets focused businesses and nurture them into the companies of tomorrow We combine our entrepreneurial flair with deep industry experience to offer investors a diversified portfolio of high potential emerging companies We are very excited to introduce the Seismic Foundry SEIS 2017/2018 Fund (the Seismic Fund) and invite you to join the investors who have already placed their trust in us The Partners Seismic Foundry 3

4 Contents 1. Key Facts 2. Why Invest in UK Startups 3. Investing at an Early Stage 4. Exit Strategy 5. Selection Criteria 6. Selection Process 7. Investing in the Fund 8. Our Charges 9. The SEIS Benefits 10. Post Investment Support 11. Partner Biographies 12. Key Risks 13. Glossary of Terms 14. FAQ 15. Contact details

5 Key Facts The Seismic Fund is a fund designed for Angel and Sophisticated Investors* with entrepreneurship at its core. Co-investment with Experts Invest alongside experienced angel investors andcapital Markets experts Diversification The Seismic Fund will invest in a diversified portfolio of companies operating across various sectors within capital markets e.g. RegTech, Research andmifidiitopics Tax Efficient AllPortfolioCompanies willbeseis eligible Unique Deal Flow Seismic Foundry benefits from a unique deal-flow by leveraging our network and capital markets knowledge to discover new companies High Potential Companies The Seismic Fund will invest in a portfolio of 4-5 companies showing high growth potential Post-Investment Support Seismic Foundry provides portfolio companies with an ecosystem of support services either directly or via our cohort of partners * The Fund is only open to professional clients and eligible counterparties as defined by the FCA.

6 Key Facts The Seismic Fund offers investors transparent and straightforward terms Fund Type Minimum Maximum Investment Investment Investment Period SEIS Fund* 10, ,000** Nov 17 - Mar 18 Investor Fees 5% Initial Fee 0% Ongoing Fees 20% Performance Fee*** * Subject to individual circumstances. The 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 *** The performance is applied once the return on investment in each company has reached 150% of the original gross investment

7 Key Facts - Details Portfolio approach The investor will receive exposure to a portfolio of between 4-5 early stage companies across various capital markets sectors. Tax relief The Fund Investments will be eligible for SEIS tax relief (subject to Individual circumstances) The Fund is also open to investors who do not wish to claim any tax benefits on their investment. Term of the Fund 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.

8 Key Facts - Details Custodian Bennett 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 certificates directly (one per portfolio company), to enable them to claim the appropriate tax reliefs. Strategic Adviser Seismic Foundry Limited. The Strategic Adviser brings sector expertise and is responsible for selecting, arranging and monitoring the investments and acting as primary point of contact for the Investor and the Portfolio companies. The Strategic Adviser is an appointed representative of the Fund Manager. Fund Manager SFC Capital Partners Limited, an FCA regulated (FRN ) fund manager specialised in the management of SEIS and EIS funds.

9 Why Invest in UK Startups? The UK provides a unique ecosystem for startups to grow and deliver returns to investors The UK government has developed one of the most active FinTech start-up ecosystems in the world thanks to a unique combination of strengths including: a broad pool financial services institutions, specialist tech capabilities, excellent infrastructure, a pre-eminent capital markets sector, and supportive policies for SMEs. Global VC investment in FinTech in Q was $4bil and is on pace to set a new annual record in In the same period $538m was invested in the UK/Europe, and$1.4b in Asia-Pacific. These statistics don t include angels rounds or private investments. * New frontiers such as DLT, AI, Machine Learning, Big Data, Chat Bots and the Internet of Things (IoT) are new realities bound only by the financial services industry s ability to adapt and adopt. Collaborative FinTech ventures that partner with financial institutions are gaining ground over so called disruptive players. By establishing direct partnerships with Fintech firms capital markets entities ensure their technology and business models remain cutting-edge and relevant. * Source: CB Insights Fintech report Q3 2017

10 Investing at an Early Stage The Seismic Foundry Fund aims to invest in Capital Markets businesses at the very early seed stage to generate significant upside Our strategy is to invest in a portfolio of companies with innovative products that provide solutions to challenges in capital markets. Through our collaborative partnership model we aim to generate successful exits at a significant (tax free) multiple of the cash invested. As the valuations of early stage startups are still considered relatively modest, the Fund will be able to acquire meaningful strategic shareholdings in these companies to maximise the potential return. We believe that investing at the earliest stages of commercial exploitation offers higher potential to realise significant capital appreciation. Such a strategy also allows Seismic Foundry to influence the management of these ventures and help ensure that the right expertise, operational support, and governance structures are put in place from the very beginning.

11 Exit Strategy We expect to generate successful exits from individual portfolio companies after the SEIS qualifying period The realisation of gains for investors is typically achieved through the exits of some of the portfolio companies. These liquidity events occur when the company has achieved exceptional growth and increased its valuation significantly, thereby providing the Fund s Investors with a multiple tax free return. Exit routes Trade sale It is the intention of the Fund to realise the maximum number of successful exits from the portfolio after the three year SEIS qualifying period, and distribute the cash gains to investors as it is generated. The Fund aims to return over 2.5 times the original capital invested (excluding tax benefits). This target return is considered to be the aggregate return of angel investments as an asset class*. * Returns to Angel Investors in Groups, Robert Wiltbank & Warren Boeker, November 2007 / Siding with the Angels, NESTA Robert Wiltbank, May 2009 Management buy-out Sale to other shareholders Listing on an appropriate Exchange

12 Selection Criteria Third Party Validation Companies will need to demonstrate strong business momentum including initial revenues, recurring sales, a growing user base or the recommendation of leading industry opinion leaders (blue chip customers, sector experts etc.) Unique Selling Proposition The company will have demonstrated a competitive advantage by showing that its solution is fundamentally better and more attractive for its target customers than the current alternatives. The management team will need to show an exhaustive expertise of the market that they are operating in Prototype The company will be expected to have developed or be close to finalizing an MVP (Minimum Viable Product) which has been, or is in the process of being, commercialized Intellectual Property When and where possible, the company will demonstrate clearly defensible intellectual property and/or leading technical knowledge. As far as possible, the company will ensure that the right protections are in place to protect the IP created e.g. trademarks, patents and copyrights, or the know-how possessed by its founders Route to Exit The candidates will demonstrate a credible path to the realisation of Investors holdings, either through a trade sale to a more established competitor or a public listing. The management will have evidenced that there is a market of potential acquirers and that they will be working towards a potential successful sale or listing of the company

13 Selection Process Seismic Foundry has put in place a rigorous and transparent investment process to ensure a strong pipeline of high quality investment opportunities Every potential investment firm has to first provide answers to an online questionnaire covering the main aspects of the company, its business plan, product traction, and proposed investment terms. Seismic Foundry undertakes a thorough due diligence process before an investment decision is made. Leveraging the Seismic Foundry partners and Start-up Funding Club expertise we collect information and investigate claims across the following issues: Business plan, market and competitive analysis Third party validation and commercial issues including customer/client feedback Background checks of the management team and its key advisors / shareholders Accounts and liabilities, financial forecasts and cashflow management Intellectual property, litigation and other legal issues Psychometric tests for company Directors and management teams

14 Investing in the Fund Investing in the Seismic SEIS Fund enables passive professional investors to get exposure to a portfolio of SEIS Qualified 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. Build your portfolio with Seismic Investors monies will be invested in a portfolio of 4-5 early stage companies. To claim SEIS Tax Relief, each Investor will receive the appropriate certificates issued by HMRC in respect of each of the Investor s qualifying investments. 20,000 Seismic will provide a quarterly report to Fund investors detailing their individual Investment Portfolio and including progress reports on companies within that Portfolio. Startup 1 Startup 2 Startup 5 15% 10%...% 5%

15 Our Charges The Seismic SEIS Fund has a simple, performance based fee structure 5% Up front fee Performance Fee: No annual Management Fee 20% of Returns on an individual company basis Only payable once you Alignment of interest with investors have received back 150% of your original gross investment in each company The Fund Manager retains the right to charge upfront arrangement and ongoing fees to companies in which the Fund invests. Value Added Tax will be charged where applicable.

16 The SEIS Benefits 9.1= Reward /2750 At Risk Years 3-7 * Loss relief on income tax of 45% In addition: 100% Inheritance Tax relief (after 2 years holding) CGT reinvestment relief- potential exemption of 50% of an existing CGT bill 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

17 Post Investment Support Seismic Foundry is an entrepreneurial organisation and understands the need to bring value beyond funding. In partnership with Start-Up Funding Club, Seismic has put in place a strong infrastructure network with leading firms providing services from legal to marketing. Insurance Bookkeeping & Accounting Promotion Innovation Grants Access IP Community Digital Marketing Advisory & Mentoring

18 Partner Biographies Bill Templer Bill is a veteran financial services executive and consultant, the managing director and owner of Faventus Consulting Services providing services to a number of organisations including the London Stock Exchange, Deutsche Bank, Lloyds Bank, ICAP, SunGard and Trading Technologies. He is also a member of a number of advisory committees, and previously was a member of the Board of Eurex Clearing as an Independent Director. Prior to establishing his own consulting business, he was a managing director at Morgan Stanley in the institutional equity division in London where he was also nominated as co-head of listed derivatives. Prior to this he was with UBS as Global Head of Listed Derivatives, working at UBS for more than 15 years, having joined S.G. Warburg in He has also served as a member of the Executive Committee and on the Board of Directors at the Futures and Options Association (now FIA Europe). Brendan Bradley brendan@seismicfoundry.com Brendan has been developing new ideas around changing market structure, regulation and technology throughout his career. He was more recently an Executive Board member and Chief Innovation Officer at Eurex, where he was responsible for championing and "brokering" new ideas," both internally and externally, and looking for new opportunities within the changing market environment, particularly in the FinTech space. This resulted in making four direct investments in early stage firms, the seeding of Illuminate Financial, a specialist FinTech VC fund, and contributing toward the set-up of the DB1 Corporate Venture Fund. He has worked within the financial services industry for 30 years and played a major part in the development of the European futures and options industry with LIFFE, DTB and Eurex. Cathryn Lyall cathy@seismicfoundry.com Cathryn is an experienced markets infrastructure consultant and Non-Executive Director with a 30 year career in capital markets across multiple asset classes. Cathryn has nurtured, built and developed a number of start-up businesses including ADX in Sydney,CBOT, BM&F Bovespa, Nasdaq NLX and CurveGlobal in London, and JADE in Singapore. She has held a number of NED and Trustee roles including over 3 years on the Deutsche Bank UK Bank Board, and is passionate about bringing good culture and governance to early stage Fintech businesses. She has held roles from Floor Trader to COO and is known for her deep industry knowledge and excellent network. Cathryn was named in the top 100 Women in Fintech in 2015 and is a founding Trustee of Futures For Kids and founding Board Director of Women In Listed Derivatives (WILD) where she is an active mentor to women in the early stage of their financial services careers.

19 Partner Biographies (cont.) Dave Feltes Dave has 23+ years experience in developing, building and leading organisations in capital markets. Currently working as consultant at KPMG UK, helping lead the market infrastructure practice, including capital market fintech solutions, deal advisory, regulatory benchmarking, operational risk, payments and Brexit. Dave has been a senior advisor for DPactum since 2015, a DLT clearing as a service solution. Prior, Dave was the co-founder and COO for CME Europe Ltd, a start-up exchange in FX, soft commodities and energy products. He joined CME Group in business development, running a portfolio of alliance companies and ventures in Europe, including Green Exchange, NOS clearing, Dubai Mercantile Exchange, and partnerships with the NSE in India. He also spent 3 years as a Principal at Oliver Wyman between 2007 and 2010, focusing on exchange strategy and capital market infrastructure due diligence. Prior to this David was CEO of buy-side proprietary firm Marquette Partners LP, rising from floor clerk to CEO over 13 years. Jeff Gale jeff@seismicfoundry.com Jeff has over 30 years experience in wholesale financial capital markets, primarily in OTC Interest Rate Derivatives, with Butler Securities and ICAP, in both mainstream and Illiquid Emerging Markets. In addition, he served as Executive Director on the board of ICAP/JLT, a joint venture initiative developing and delivering Insurance Derivatives, and as Global Head of Sales at MyTreasury, a leading trading platform for Corporate Treasurers. He subsequently established his own consultancy firm and has enjoyed leading roles in various Finance start-ups, ranging from small bootstraps to the large tier 1 bank and exchange consortium, CurveGlobal, in 2016.

20 Key Risks An investment in the Fund is subject to a number of risks given the nature of the private companies targeted. Before making any investment decision, prospective Investors should consider carefully the risks associated with investing in the Fund. As part of their own due diligence process, Investors should review all the information contained in this document, including the risk factors described below. Investment Risk The 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 Seismic Fund will comprise investments in unquoted companies that are startup 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 Qualifying Companies are not publicly traded which may mean that limited information will be available to determine the current investment value. Investing in such products should be carefully considered external consultation may be advisable. You should be prepared to remain in the investment 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 their Commitment to the Fund should reconsider investing. 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 status or adverse shareholder rights being imposed by a later investor.

21 Key Risks Taxation 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. Seismic Foundry and Startup Funding Club do 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 legislation at the time of investment. However, the Fund Manager cannot guarantee that all Investments will continue to qualify for any SEIS Tax Relief or indeed the continued availability of SEIS or 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 dates on which initial SEIS Tax Relief and Capital Gains Tax Reinvestment 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 Tax Relief or other tax advantages. An investor should be aware that SEIS Tax Relief and Capital Gains Tax Reinvestment 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. 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.

22 Glossary of Terms AIM 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 Investor Professional clients only. Client Suitability and Appropriateness Questionnaire The questionnaire to be completed by each Investor, which accompanies the Application Form. Capital Gains Tax Reinvestment Relief Relief from CGT (Section 5B of the Taxation of Chargeable Gains Act 1992). Closing Date The Closing Dates is 28 th February 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 The Seismic Foundry SEIS 2017/2018 Fund. Fund Manager or Manager SFC 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 Seismic SEIS 2017/2018 Fund

23 Glossary of Terms Investee 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. SEIS Seed Enterprise Investment Scheme as set out in Chapter 4 of Part 5A Income Tax Act (ITA 2007). SEIS Qualifying Company A company which is a qualifying company for SEIS purposes. SEIS Tax Relief Relief from income tax and CGT payable under SEIS legislation. Seismic Foundry Fund Qualifying Company A company which is a qualifying company for Seismic Foundry Fund purposes. Seismic Foundry Fund Tax Relief Relief from income tax and CGT payable under the appropriate SEIS legislation. Strategic Adviser Seismic Foundry Limited. The Strategic Adviser brings sector expertise and is responsible for selecting, arranging and monitoring the investments and acting as primary point of contact for the Investor and the Portfolio companies. The Strategic Adviser is an appointed representative of the Fund Manager. VAT Value added tax.

24 FAQ Who can invest in our fund? The underlying investments having a very high risk profile, the Seismic SEIS 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 10,000. There is no maximum although an individual s total annual SEIS allowance under income tax and CGT relief is limited to 100,000 What kind of portfolio will I own? Investors will receive an exposure to a portfolio of 4-5 early stage companies operating across various sectors, within the capital markets industry. How quickly will my money beinvested? 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? 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 typically occur at a time when the portfolio company has achieved exceptional growth and significantly increased its valuation, 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 often 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 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 the section 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. Are there any upfront fees on the investment? There is a 5% upfront fee, which is subject to VAT. Yes, however the SEIS tax benefits apply only to individuals.

25 FAQ What are the ongoing fees? There are no ongoing management fees, however the fund is subject to a performance related fee on each investment of 20%, once the investor has achieved 150% of the gross value of the initial investment in the company. Who manages the fund? SFC Capital Partners Ltd will be the Fund Manager of the Seismic Foundry SEIS 2017/2018 Fund. The Investment Committee is responsible for deciding upon 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. How do I claim the SEIS tax benefits? The Seismic Foundry SEIS Fund will invest only in SEIS 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 certificates needed to claim the corresponding tax reliefs. Taxation treatment depends on the individual circumstances of the Investor. 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 all Investors. 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. 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.

26 FAQ Am I going to be paid dividends? Given the nature of the underlying companies, Seismic 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 after 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 Fund without having first taken personal financial advice as to its appropriateness and suitability of the 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 after investing in them? Seismic 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 the relevant 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.

27 Further Information If any further information related to the Fund is required please contact: The Seismic Foundry Partners Mail: Mob: +44 (0) Bill Mob: +44 (0) Brendan Mob: +44 (0) Cathy Mob: +44 (0) Dave Mob: +44 (0) Jeff Fund Manager SFC Capital Partners Limited 1-6 Speedy Place Cromer Street London WC1H 8BU Phone: +44 (0) Mail: