EIS Fund. Information Memorandum 2013 / 2014

Transcription

1 EIS Fund Information Memorandum 2013 / 2014

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3 Section 1 Important notice This Information Memorandum and any associated Customer Agreement is issued by MMC Ventures Limited ( MMC ) of 2 Kensington Square, London W8 5EP, a firm authorised and regulated by the Financial Conduct Authority ( FCA ). This Information Memorandum and any associated Customer Agreement is a financial promotion under section 21 of the Financial Services and Markets Act 2000 ( FSMA ). Your attention is drawn to the section entitled Risk Factors. Neither this Information Memorandum nor the associated Customer Agreement constitutes an approved prospectus within the meaning of Section 85(7) of the FSMA and they do not constitute an offer to the public in the United Kingdom or elsewhere. Prospective Investors should not regard the contents of this Information Memorandum or the associated Customer Agreement as constituting advice relating to legal, taxation or investment matters and are advised to consult their own professional advisers before contemplating any investment to which this Information Memorandum and the Customer Agreement relate. No such advice has been given by MMC Ventures Limited. In particular, if you are in any doubt about the suitability of such an investment, you should contact your independent financial adviser authorised under the FSMA and you are advised not to invest until you have done so. Neither this Information Memorandum nor any associated Customer Agreement constitutes, and may not be used for the purposes of, an offer or invitation to subscribe for any investment to which they relate by any person in any jurisdiction outside the United Kingdom. This Information Memorandum, the associated Customer Agreement and the information contained in them are not for publication or distribution to persons outside the United Kingdom. They do not constitute, and should not be considered as, an offer to buy or sell, or solicitation of an offer to buy or sell, any security or share. MMC and its directors have taken all reasonable care to ensure that all the facts stated in this Information Memorandum and the associated Customer Agreement are true and accurate in all material respects and that there are no other material facts or opinions or information which have been omitted from them, which would make any part of this Information Memorandum or the associated Customer Agreement misleading. MMC and its directors accept responsibility accordingly. The information contained in this Information Memorandum and the associated Customer Agreement makes reference to the current laws of the United Kingdom concerning EIS relief, IHT relief and CGT Deferral relief, which are subject to the conditions summarised in the section entitled Tax considerations on page 19. The levels and bases of relief may be subject to change. The tax reliefs referred to in this Information Memorandum and the associated Customer Agreement are those currently available and their value depends upon individual circumstances. If you are in any doubt as to your position, you are strongly advised to consult your professional adviser before making an investment. Past performance is not necessarily a guide to future performance and may not necessarily be repeated. You should be aware that share values and income from them may go down as well as up and you may not get back all or any of the amount you originally invested. Please note that applications may only be made, and will only be accepted, subject to the Terms & Conditions set out in the associated Customer Agreement. You are entitled to terminate your Customer Agreement relating to your investment and to withdraw your investment in accordance with such Terms & Conditions. Please see the section entitled Definitions for the defined terms which apply in this Information Memorandum and the associated Customer Agreement. This Information Memorandum should be read in conjunction with the associated Customer Agreement. 1st November 2013 MMC Ventures limited EIS Fund Information Memorandum 2013 /

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5 Section 2 Risk factors The attention of prospective Investors is drawn to each of the following risk factors. An investment in the EIS Fund, the Growth Generation Fund, the Co-investment Fund or membership of the Syndicate may not be suitable for all investors. In particular, potential Investors are recommended to seek specialist independent tax and financial advice before investing. Tax risks While it is our intention that the EIS Fund and the Growth Generation Fund will be managed so that all investments will qualify for EIS tax reliefs, there can be no guarantee that such status will be maintained. A failure to continue to meet the qualifying requirements could result in adverse tax consequences for Investors, including the requirement to repay the 30% income tax relief and to pay any CGT liability deferred on subscribing for those shares. No assurance can be given as to the preservation of the EIS-qualifying status of an Investee Company, which may be outside the control of MMC. Qualifying Companies which subsequently obtain a listing on the Official List of the United Kingdom Listing Authority (as opposed to AIM) will lose their qualifying status for the purposes of IHT relief. EIS relief will also be lost if arrangements were in place at the date of the investment for such a listing to take place. The tax reliefs referred to in this document are those currently applying as at the date hereof which are assumed to apply throughout on a continuing basis. However, levels and bases of, and relief from, taxation are subject to change and such tax reliefs may not be available in the future and such changes could be retrospective. Further taxes or costs other than those referred to in this Information Memorandum or in the associated Customer Agreement may arise which are not paid through MMC or imposed by us. Prospective Investors should seek their own independent professional advice on their particular tax situation and the application of such tax reliefs prior to making an investment in the EIS Fund, the Growth Generation Fund, the Co-investment Fund or before becoming a member of the Syndicate. The value of tax reliefs depends on each Investor s individual circumstances. Portfolio risks There can be no assurance that the EIS Fund, the Growth Generation Fund, the Co-investment Fund or the Syndicate will meet their objectives or that suitable investment opportunities will be identified. The past performance of investments by MMC, the EIS Fund, the Growth Generation Fund, the Co-investment fund or the Syndicate members is no indicator of the future performance of investments. The value of the EIS Fund s, the Growth Generation Fund s, the Co-investment Fund s or the Syndicate s investments depends on the performance of Investee Companies and other market factors outside our control. The value of investments held by the EIS Fund, the Growth Generation Fund, the Co-investment Fund or the Syndicate may go down as well as up and Investors may not receive back all or any of the amount invested. Investments made by the EIS Fund, the Growth Generation Fund, the Co-investment Fund or as a result of membership of the Syndicate will be in private companies whose shares may be difficult to sell and market. Such shares may have risks associated with them greater than quoted securities or shares. Restrictions may apply to the transfer of shares in private companies in which the EIS Fund, the Growth Generation Fund, the Co-investment Fund or the Syndicate invests. The timing of any realisation cannot be predicted and proper information for calculating the current value of the EIS Fund s, the Growth Generation Fund s, the Co-investment Fund s and the Syndicate s investments or the degree of risk posed may not be available. Where debt leverage is introduced into an Investee Company, the investment made by one or more of (1) the EIS Fund, (2) the Growth Generation Fund, (3) the Co-investment Fund and/or (4) the Syndicate may be subject to additional risk. MMC Ventures limited EIS Fund Information Memorandum 2013 /

6 2 Risk factors It may be difficult and time-consuming for an Investor to terminate his Customer Agreement or withdraw or liquidate his investments from the EIS Fund, the Growth Generation Fund, or the Co-investment Fund or liquidate his Syndicate investments due to the illiquid nature of the investments proposed. In any event, withdrawal rights may only be exercised in accordance with the Terms & Conditions. We may not be able to realise such investments quickly, at a reasonable price or, in some circumstances, at any price. Investors should consider the investments contemplated by this Information Memorandum as long-term investments. Due to the nature of EIS relief, Investors participating via the Co-investment Fund or Syndicate members who elect not to invest in shares qualifying for EIS relief may be offered a different class of shares from the Relevant Shares in which the EIS Fund invests. The investment made available to such Investors may carry some form of liquidation preference which may result in the holders of such capital instruments receiving all or some of their investment back on an exit (such as a trade sale, flotation or liquidation of the Investee Company or the sale by it of its business) prior to Investors participating via the EIS Fund and Growth Generation Fund who can take advantage of EIS relief. Accordingly, the existence of any such preference may result in such Investors in the EIS Fund and Growth Generation Fund receiving a lower return on their investment or failing to recover some or all of their investment. Investors who subscribe to the EIS Fund or the Growth Generation Fund on only one occasion will have their Subscriptions invested in at least four Investee Companies. The poor performance by one or more of these Investee Companies may have a material adverse effect on their investment. Company risks MMC depends on the services of its key personnel. The loss of services of these persons could have a material adverse effect on the performance of the EIS Fund s, Growth Generation Fund s, Co-investment Fund s and the Syndicate s investments. MMC s success is also highly dependent on its continuing ability to identify, hire, train, motivate and retain highly-qualified personnel. Competition for such personnel can be intense and MMC cannot give any assurance that it will be able to attract or retain highlyqualified personnel in the future. Forward-looking statements Investors should not place reliance on forward-looking statements. This document includes statements that are (or may be deemed to be) forward-looking statements, which can be identified by the use of forward-looking terminology including the terms believes, continues, expects, intends, may, will, would, should or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this document, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. Potential conflicts of interest MMC manages or provides services for MMC s Funds. Such funds or investors may invest in companies in which the other MMC Funds have also invested or may invest. MMC may provide MMC s Funds the opportunity to co-invest with other MMC Funds. Potential conflicts may be inherent or arise from MMC providing such opportunities. In particular certain of MMC s Funds do not have EIS tax reliefs as an objective of their investments. In addition, once such co-investments are made, the interests of each of MMC s Funds and those of co-investing investors may subsequently diverge. 6 MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014

7 Section 3 Contents Section 1 Important notice 3 Section 7 Our team 14 Section 2 Risk factors 5 Tax risks 5 Portfolio risks 5 Company risks 6 Forward-looking statements 6 Potential conflicts of interest 6 Section 3 Contents 7 Section 4 Welcome to MMC 8 Section 5 Our investment approach 10 Deal flow 10 Investment focus 10 Co-investment 10 Team 11 Process 11 Portfolio management 11 Investor alignment 11 Section 6 Section 8 Recent EIS investments 16 Section 9 Track record 18 Section 10 Tax considerations 19 EIS tax reliefs 19 Income tax relief 19 Tax-free capital gains 20 CGT deferral relief 20 Loss relief 20 Claiming EIS relief 22 IHT relief 23 Investing through a SIPP 23 Supplementing pensions 23 Section 11 Advisers 24 Section 12 Definitions 25 EIS Fund 12 Structure 12 Growth Generation Fund 12 Investor communications 13 Fees 13 How to apply 13 MMC Ventures limited EIS Fund Information Memorandum 2013 /

8 Section 4 Welcome to MMC MMC is an award-winning fund manager investing in private companies in business sectors where the UK is a world leader. We have been investing for 14 years: we were first authorised by the Financial Conduct Authority (FCA) in We began as a vehicle for investment by a Syndicate of like-minded business angel investors, including the three MMC founders, with the philosophy of providing capital and strategic advice to growing companies. This history of personal commitment to MMC s investments has strongly influenced our approach to risk and the structuring of our deals. Over 10 million of our invested funds has come from the MMC partners and team. We increased our FCA authorisation and commenced managing discretionary EIS portfolios in A portfolio approach to EIS investments is, we believe, the best way to mitigate risk and achieve superior returns. We currently have over 110 million under management and we invest million per annum in a combination of new investments and follow-on capital for existing portfolio companies. Our Syndicate continues and co-invests with our managed funds. It comprises leading businessmen, entrepreneurs and professionals who retain their investment discretion, picking and choosing investments on a deal-by-deal basis but handing all post-investment shareholder authority to MMC. Syndicate members are available to provide advice and introductions to our portfolio companies and in several cases sit on their boards. The majority of our investors seek EIS qualifying investments and we provide an EIS portfolio management service (the MMC EIS Fund) for this purpose. However, we also manage institutional money that does not qualify for tax reliefs but which we co-invest with our EIS Fund on the same terms. These institutional funds include a 30 million 10 year limited partnership (the Enterprise Capital Fund or ECF) in which the Government has invested 20 million, and a 14 million 8 year limited partnership (the MMC London Fund) which is managed on behalf of the Mayor of London and which is available to co-invest with MMC s other funds or with third-party funds in businesses based in London. This co-investment policy serves to reinforce our fundamental approach of investing on the commercial merits of each transaction and viewing the EIS tax benefits as highly attractive but not the reason to invest. However, the EIS overlay means that returns are enhanced, and the risks materially reduced, by the tax subsidy (the net after tax exposure is reduced to 38.5% for a 45% marginal rate tax payer). MMC filters a flow of interesting growth companies and nurtures those chosen for investment to achieve their growth objectives. We enjoy a high quality deal flow, much of it proprietary, that we sift down from circa 1,000 and select six to ten new investments annually. We are rigorous in our due diligence and ensure that comprehensive investor protections are in place before investing. 8 MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014

9 4 MMC is one of the most active private company investors in the UK market. We are a supportive investor and look to work with portfolio management teams to achieve their objectives. However, we will move or replace management team members if we deem it necessary. Exit strategies are analysed and agreed with management at the outset and are reviewed regularly. As at 1st November 2013, we had 24 companies in our portfolio, 17 of which are in our EIS fund. We actively seek opportunities in high growth sectors where the UK is a world leader, particularly financial and business services, business software, digital media and e-commerce. This approach means that we and our portfolio companies have access to a deep pool of domestic expertise and talent. We have a highly regarded team of professionals who are recruited from blue chip institutions where they have gained experience in strategy consulting, investment banking, law, accountancy and start-ups. MMC team members have invested in all portfolio companies on the same terms as our investors. This style of operating is designed to align our interests with that of our investors. Our EIS Fund is always open to new investment and we aim to invest each Subscription (minimum 25,000) in at least four EIS qualifying companies within 9-18 months. Over the last three years EIS Fund investors have typically seen their Subscription fully invested in 7-9 companies within approximately 12 months. Each investor s portfolio will vary depending on when the Subscription was made. Small and medium enterprises (SMEs) are generally regarded as the engine of the economy and the primary source of growth and new jobs. The UK government has sought to support this vital sector through such measures as the EIS scheme, which is specifically designed to support young, growing companies. A recent study by the Association of Investment Companies indicates that the tax paid, including employment related taxes by companies receiving investment more than covers the income tax reliefs provided to investors, so the government sponsored tax schemes for SMEs such as VCTs and EIS are essentially self-funding. MMC demonstrates what the EIS scheme seeks to promote: a portfolio of vibrant, strongly growing companies which have created over 1,900 jobs to date. Our fundamental approach is to invest on the commercial merits of each transaction, viewing the EIS tax benefits as highly attractive but not the reason to invest. Bruce Macfarlane (MMC Managing Partner) MMC Ventures limited EIS Fund Information Memorandum 2013 /

10 Section 5 Our investment approach Deal flow MMC received over 1,000 investment opportunities in From those we chose 150 management teams to meet. We ultimately made six new EIS investments. We source deals from intermediaries and contacts that MMC has established throughout the UK over the past 14 years. We research investment trends in our chosen sectors and constantly seek out opportunities from our network of entrepreneurs and advisers. We are also a desirable co-investor for other venture capital funds, particularly those dependent on institutional money, which is extremely scarce. Many opportunities are introduced to us by other venture capital firms and the majority of our new investments in 2012 were co-investments alongside European and US institutional venture capital funds. MMC is a member of key industry bodies which are also sources of deal flow: the British Venture Capital Association (BVCA), where we are represented on the Venture Committee, and the Enterprise Investment Scheme Association (EISA), where we are represented on the board and the Regulatory Committee. Investment focus We focus on technology-enabled businesses in sectors where the UK is a world leader, particularly financial and business services, business software, digital media and e-commerce. In so doing we have local access to deep pools of world-class innovation and talent. MMC seeks out fast-growing early-stage businesses led by impressive management teams. We are looking for companies that leverage technology to deliver goods and services in an innovative or more efficient way that disrupts incumbent businesses. We invest in companies with demonstrable commercial traction and growing revenues. We do not invest in start-ups. We avoid capital intensive businesses and invest only when we are comfortable that we (and our co-investors) have the capital capacity to see the business through to profitability or scale, at which point exits are more easily achieved. Typically, we invest between 500,000 and 2 million in an initial funding round in each company but we will support the business, as it grows, through further funding up to around 5 million. This capacity to fund a company right through its early growth stages is one reason why we are such an attractive investor. It also means that new investor Subscriptions participate in follow-on rounds and acquire shares in businesses that have grown under our guidance. Sector breakdown of current investments by number of companies E-commerce 29% Business software 21% Business services 17% Digital media 13% Financial services 8% Other 12% Co-investment Where the company and investment is EIS qualifying we seek to invest the EIS Fund alongside our other managed funds, including the institutional Co-investment Fund, the MMC London Fund and the ECF Fund (now making follow-on investments only). None of these other funds benefits from tax reliefs. This co-investment policy reinforces our central principle of investing on the commercial merits of each transaction, viewing the EIS benefit as a highly attractive attribute but not the core proposition. This internal co-investment policy applies externally too. We seek wherever possible to co-invest MMC funds with third-party investors that can bring value, particularly wealthy, well connected business angels and institutionallybacked venture capital firms. In this way we can access attractive deals and ensure that the company has sufficient financial firepower to take it through its growth stages. These institutional investors typically operate large limited partnership funds that require high minimums (usually 10 MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014

11 5 several million dollars) and long-term commitments (typically 10 years) from their investors (if indeed their funds are open to new investors). Thus investing though MMC provides EIS investors with a low cost, highly tax efficient and flexible means of accessing world-class businesses. Team We are a London-based team with highly relevant experience in strategy consulting, investment banking, law, accountancy and start-ups. Our approach is to recruit able professionals who bring a fresh perspective to venture capital that is balanced by the partners experience and seasoned judgment to create a dynamic team. The team has over 50 years of venture capital experience and has worked and invested together for many years: the five partners have been at the firm for an average of eight years. The whole team is involved in deal selection. The investment team then structures and conducts due diligence on proposed deals with the final investment decision being made by a separate investment committee. Process Our due diligence process is rigorous. We conduct full analysis of the business, the market and the management to validate their claims and we engage third-party experts to provide technical, financial, legal and psychometric assessments, as appropriate. We summarise the findings in a detailed report for the investment committee (which is also provided to our Syndicate investors). In every case, we require an investment agreement that contains investor controls and protection. Deal structuring is a delicate process, balancing investors interests with management incentives, while promoting a successful outcome. We have the skills and expertise to execute this process, having structured six new and two follow-on EIS deals in 2012 alone. Our tax advisers pre-clear with HMRC that each new company to be invested in by the EIS and Growth Generation Fund is EIS qualifying. Portfolio management MMC is an active investor, agreeing on a set of working principles up-front with management teams and insisting on regular strategy sessions to review progress and exit considerations, as well as supporting corporate governance and key hires. We place great emphasis on working closely and in partnership with management teams throughout the life of the investment. We require board representation in all cases and must approve the chairman. Using their industry expertise and experience, members of our Syndicate are also a source of advice, support and introductions for our portfolio companies; in several cases members sit on their boards. We actively work with management on the exit process. In most cases we will appoint an independent corporate finance adviser to structure the exit. Several of our portfolio companies are currently working with advisers. Acquirors are most likely to be trade buyers from the relevant industry or mid-market buy-out firms. IPOs are also possible and we have previously floated two portfolio companies on AIM. We are currently invested in 24 companies and through active, post-investment support believe we can mitigate investment risks and maximise shareholder value. Investor alignment The founding partners and team members have invested alongside our investors (on the same terms), for a total of over 10 million to date. All MMC professionals participate in the firm s carried interest scheme, which allocates the profits earned from the performance fee component of our charging structure. Full team participation in such schemes is unusual in the venture capital industry and reflects our meritocratic culture. Our fee structure is low and designed to reflect the different activities we undertake to achieve our investors objectives. In years one and two, the annual management fees are paid in cash, but in years three and four the fees are accrued and paid on return of capital. There is no annual management fee after year four. Thus our fee structure incentivises us to achieve timely and profitable exits. MMC Ventures limited EIS Fund Information Memorandum 2013 /

12 Section 6 EIS Fund Structure Our three principal activities are as follows: Share Subscription / investment: the introduction of investors to target companies whereby MMC arranges the purchase of shares on behalf of the investor; Exit/ Disposal: we arrange the disposal of our investors share holdings and actively work with management on the exit process; and Advisory and monitoring: we actively monitor the investments and work with the management teams of the investee companies, insisting upon regular strategy sessions to review progress as well as supporting corporate governance and key hires. Our EIS Fund is suitable for UK taxpayers seeking a diversified portfolio of growth capital investments benefiting from attractive EIS tax reliefs. These reliefs boost investor returns and offer significant downside protection. (See section entitled Tax considerations on page19). MMC invests on behalf of EIS Fund investors in a portfolio of EIS-eligible companies. Our EIS Fund is open ended, enabling Subscriptions to be made at any time. Thus individual investor portfolios will vary depending upon when each Subscription was made. Each investor has an account administered by our Nominee (interest on cash balances accrues to the investor). The minimum Subscription to the EIS Fund is 25,000. The EIS Fund is not a legal entity, is not an unregulated collective investment scheme as defined in section 235 of the FSMA, and may be deemed suitable for retail clients subject to advice from a suitably qualified professional adviser. It is not a HMRC approved EIS Fund. The EIS Fund comprises a series of discretionary managed portfolio accounts for Investors. Investors are the beneficial owners of shares in the Investee Companies although the Nominee will be the registered holder of such shares. MMC will arrange the investment of each Subscription in at least four Investee Companies within 9 to 18 months. These investments comprise both new deals and follow-on funding rounds for existing Investee Companies that are EIS qualifying. Capital is returned to investors as realisations are made and will not be re-invested by us unless we are specifically instructed otherwise. Investors may re-subscribe to our EIS Fund at any time. EIS relief is obtained on a deal by deal basis. MMC will send investors the EIS3 certificates after each investment is made (this is obtained by the portfolio company from HMRC). Investors should then file their EIS3 certificates with their tax return in order to obtain the EIS tax reliefs. (See section entitled Claiming EIS relief on page 22). Growth Generation Fund MMC is keen to attract younger investors to this asset class. To that end we have designed a Growth Generation Fund (GGF) that is exclusive to investors aged between 18 and 35. To our knowledge the Growth Generation Fund is the only venture capital fund specifically created for younger investors. The Growth Generation Fund participates in the same flow of EIS deals that the MMC EIS Fund invests in and GGF investors enjoy the same EIS tax benefits. As with the EIS Fund, Subscriptions will be invested in at least four private UK companies that are eligible for EIS investment. Investments will be made in both new and follow-on deals. We do not charge an initial commission or annual management fees for the GGF. Thus the GGF is not intended to raise significant sums and has a maximum Subscription of 10,000 and a minimum Subscription of 2,500. Re-subscriptions cannot bring the total subscribed to more than 10, MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014

13 6 Investor communications We pride ourselves on open and transparent communication with our investors. As each Subscription is invested, investors receive a short description of the portfolio company and a contract note. We provide quarterly reports on each investor portfolio with trading updates on each company and performance against target. Reports include a valuation of each company, which is independently audited annually. Investors should receive EIS3 certificates within weeks of investment; however, these timings may vary depending on the Investee Company and HMRC. How to apply For further information and copies of a Customer Agreement: us at: fundapplication@mmcventures.com or Telephone: Investors are invited to a monthly At Home held in MMC s offices where the management team of a portfolio company updates on progress. We also hold an event each year to which all investors are invited to meet portfolio company management teams and the full MMC team. Fees EIS Fund MMC charges an initial fee of 1%. The annual management fee is 2.5% payable quarterly in advance. In years one and two, the annual management fees are paid in cash, but in years three and four the fees are accrued and paid on return of capital. There is no annual management fee after year four. A performance fee of 20% is payable on gains made after the initial capital subscribed has been returned. This is applied on an aggregated basis to all Subscriptions made within a single tax year. No custodian or any other costs are charged. Growth Generation Fund No initial arrangement fee or annual management fees are charged on the Growth Generation Fund. A performance fee of 20% is charged on net gains made after the initial capital subscribed has been returned. No custodian fee or any other costs are charged. Syndicate Investors are charged a joining fee of 1,000 and pay an annual custodian fee of 200. On each new investment a brokerage fee of 3% is payable for the purchase of the initial investment. A performance fee of 20% is charged on the net gain made on each investment, on a deal-by-deal basis. Please note: EIS tax relief applies to actual monies invested (i.e. Subscriptions net of fees). Fees are subject to VAT where applicable. For further information on fees please refer to the relevant Customer Agreement. MMC Ventures limited EIS Fund Information Memorandum 2013 /

14 Section 7 Our team Jonathan Coker Partner Jon is responsible for leading new investments and representing MMC on portfolio company boards, having joined in He has significant experience helping early-stage UK businesses grow into sizeable international organisations. Jon believes that MMC s true value comes from helping founder-led businesses build strong executive teams and driving good business processes from the board down. Before joining MMC, Jon was a member of the global leveraged fund team at JP Morgan. He has an MEng in Engineering Science from St Peters, Oxford University. Camilla Dolan Investment Manager Camilla joined the team in She is responsible for sourcing new deals and deal execution. Before joining MMC, Camilla was a Consultant and Case Team Leader at Bain & Co where she specialised in the financial services technology sector. Camilla has an MA in Law from Merton College, Oxford University. Prior to university she set up and ran an equine business. Venetia Kennedy, Investor Support and Team Assistant Venetia joined MMC in 2011 and is responsible for investor support, including responding to investor queries and organising events. She is also our office manager and team assistant. Before joining MMC, Venetia worked for an insurance broker in the City. Bruce Macfarlane Managing Partner Bruce sits on the MMC investment committee and is actively engaged with portfolio companies. He is a member of the Venture Committee of the BVCA. He is on the board of the EISA and is a member of the Growth Finance Committee which advises the Prime Minister. Before co-founding MMC in 2000, Bruce was a Managing Director at Merrill Lynch, where he was head of UK Investment Banking, and Bankers Trust. Earlier in his career he practised as a US securities lawyer at Skadden Arps in New York. Bruce has a BA in English from Leeds University and is a Chartered Director. He qualified as a barrister in London and an attorney in New York. Tom Hopkins Partner Tom joined MMC in He manages all internal operations and supervises our fund structures. Tom sits on the Regulatory Committee of the EISA. He is also a member of the MMC investment committee and represents the firm on portfolio company boards. Before joining MMC, Tom was a member of the investment team at Active Private Equity and prior to that PwC. He is a qualified Chartered Accountant, has an MA in Economic History from Edinburgh University and an MBA from INSEAD. Simon Menashy Investment Manager Simon joined the MMC investment team in He is focused on execution of new and follow-on investments, and has responsibility for screening new deal flow. Previously, Simon was a senior consultant in the Strategy practice at Deloitte, working with media, telco and technology companies across Europe on corporate strategy, analytics and mergers and acquisitions projects. He has a BSc in Physics and Space Research and a Graduate Diploma in Business Administration from the University of Birmingham, where he also started a small IT business. 14 MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014

15 7 Alan Morgan Chairman Alan co-founded MMC Ventures in He chairs the investment committee and leads MMC s financial services focus. Alan chairs AdFisco, an advisory company focused on financial services, and is a Non-Executive Director of a number of companies including Axa Investment Managers and Future Route. Alan spent 28 years at McKinsey & Co where he was head of the financial services practice in UK, Europe and the Middle East. He was also a board member of the McKinsey Investment Office which manages about $8 billion of staff and partner retirement and investment products. Alan has an MA in Law from Trinity College, Oxford University, an MBA from Harvard Business School and is a qualified barrister. Margaret Perchik Financial Analyst Margaret joined MMC in She is responsible for portfolio data analysis, reporting and fund allocations. Before joining MMC, Margaret spent a year as a researcher with a boutique executive search firm specialising in investment banking technology. Margaret graduated from the University of Bristol with a BSc in Physics and has also completed a course in Financial Engineering taught by Columbia University professors. Anna Slemmings Sales & Marketing Anna joined the sales and marketing team in She assists in coordinating and implementing all aspects of marketing and sales activities to investors and advisers. Prior to joining MMC Anna worked as the marketing manager for a media production company and as a publisher of special interest reports for The Times newspaper. Anna graduated from Exeter University with a BA in Politics. Rory Stirling Partner Having joined the company in 2009, Rory is responsible for leading new investments and representing MMC on portfolio company boards. Rory is passionate about technology, particularly within the consumer internet, mobile and software sectors. Before joining MMC, Rory was in the UK mergers and acquisitions team at Greenhill & Co, before going on to found a start-up business in the social media space. He has an MA in Economics from Edinburgh University. Mhairi Treacher Sales & Marketing Mhairi joined MMC in 2012 and is responsible for marketing and sales. Mhairi spends her time developing relationships with financial advisers and is key to ensuring a consistent MMC message in the market. Before joining MMC, Mhairi worked at Cazenove Capital Management which she joined as an economist and latterly as part of the SIPP product team. She has an MA in Economics from Edinburgh University and a Securities Diploma. MMC Ventures limited EIS Fund Information Memorandum 2013 /

16 Section 8 Recent EIS investments Wedo Sector e-commerce Total MMC investment 1.3m Date of most recent investment October 2013 Wedo is a multi-niche e-commerce business focusing on furniture retail. It operates a number of specialised retail sites which are specific to and optimised for a particular category of product. Wedo aims to provide customers with the best price, range and product information in each specialist product area. The business has grown rapidly from one website in December 2011 to five niche sites in January 2013; MMC s investment will help Wedo to launch further new sites and generate significant revenue growth. Reevoo Sector Business software Total MMC investment 3.6m Date of investment September 2013 Reevoo provides social commerce solutions to major online and offline retailers, brands and manufacturers. Reevoo operates a feedback engine which enables businesses to capture authenticated customer reviews on their products and services. These reviews are then utilised to increase consumer trust and enhance customer marketing material with the primary aim of driving increased sales conversion. Reevoo s ambition is to become a leading global player in the social commerce solutions market. Its content of ratings, reviews and conversations is now seen over 750 million times every month. Tyres on the Drive Sector e-commerce Total MMC investment 1.6m Date of most recent investment September 2013 Tyres on the Drive (ToTD) combines online sales of tyres with a fleet of state-of-the-art fitting vans to reduce the cost and improve the customer experience of replacing tyres. Customers use an instant tyre price comparison website, then pick a convenient time and place for a technician to come out and fit them. MMC funding is enabling the business to expand from a regional operation to a national service. Boticca.com Sector e-commerce Total MMC investment 1m Date of most recent investment August 2013 Boticca offers a luxury bazaar of fashion accessories that connects talented, independent fashion accessories designers directly with customers seeking unique pieces from exotic places. Boticca.com is a curated marketplace which in bypassing traditional retail channels can avoid their heavy mark-ups. Boticca.com was selected #3 on The Times list of Top 50 Fashion & Beauty Websites as the Global online jewellery and accessories boutique. MMC s investment was sourced to support the company s plans to enter new international markets. 16 MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014

17 8 Love Home Swap Sector e-commerce Total MMC investment 2.4m Date of most recent investment August 2013 Love Home Swap operates a subscription market-place that facilitates home swapping between members around the world. This is a low cost, web-enabled version of a long-established practice and the first in the sector to exploit online social networks. Love Home Swap utilises a proven demand for home swapping whilst reducing traditional barriers to adoption by creating a network with global reach and member trust features. The Love Home Swap site has grown to over 47,000 property listings in 150 countries. Invenias Sector Business software Total MMC investment 0.6m Date of investment April 2013 Invenias is a fast-growing provider of cloud-delivered software solutions to the executive search and strategic recruitment sector. It enables its customers to fulfil search assignments more effectively, build stronger relationships with their clients and candidates and transform the productivity of their operations. NewVoiceMedia Sector Business software Total MMC investment 1.5m Date of most recent investment January 2013 NewVoiceMedia provides software to businesses that run call centres, doing away with expensive on-premise equipment in favour of services hosted in the cloud and requiring only an internet connection. In addition to reducing costs, this enables new functions such as smart call routing and integration with Salesforce. ijento Total MMC investment 1.7m Sector date of investment Business software october 2012 ijento is a provider of digital analytics software that enables businesses to improve their customer targeting. ijento integrates fragmented web analytics data with customer data from other digital and offline sources to create a single view of the digital consumer. It allows brands to extract better customer intelligence and gain insights into customer behaviour, engagement and intent at the individual level. MMC Ventures limited EIS Fund Information Memorandum 2013 /

18 Section 9 Track record MMC is recognised in the industry as a leading EIS fund manager. Growing Business, reported in December 2012 that MMC Ventures invested in 12 firms in 2012, making it a record year for the venture capital firm. [It] has invested 14m in these fast-growth firms, in deals that total 36m with finance from additional investors. The 2013 Early-Stage Investor Report, published by Ascendant, ranked MMC as the third most active early-stage investor in 2012 and Q The Tax Efficient Review, published by Martin Churchill, has ranked the MMC EIS Fund as one of the top EIS funds in each of the past five years. The Tax Shelter Report, published by Allenbridge, also rates the MMC EIS Fund very highly. It reported that for investors with an appetite for backing young growth companies, MMC EIS is one of the most experienced and responsible managers in this sector. MMC was awarded EIS Fund Manager of the Year by the EISA for 2008, and was a finalist for this award in 2009, 2011 and MMC was short-listed for the Investor Allstars Equity Gap Fund of the Year for 2012 and for Our portfolio has shown strong growth through the downturn and is now experiencing the benefits of economic recovery. Our current portfolio of 24 companies has grown revenue over five times and created over 1,900 jobs since we invested. The MMC EIS Fund is independently audited each year. Investments are held at cost, adjusting upwards only by reference to third-party investment or an exit. We expect to exit each investment within 3-7 years. The average age of our current EIS Fund portfolio is 2.9 years and hence the majority of our investments are held at cost. Previous exits have returned an average of 2.4x the invested amount. Since inception, the EIS Fund has made investments in 24 companies. Six have failed (none of which received investment in the last three years), all qualifying for loss reliefs. Immedia Sector: Digital media Dedicated internet radio stations formulated for the retail sector Exit: AIM flotation Date: Q Gross IRR: 18.9% Gross return: 1.94x OneClick HR Sector: Business services Human resources software and outsourcing solutions Exit: AIM flotation Date: Q Gross IRR: 180.1% Gross return: 2.81x EISA EIS Fund Manager of the Year: Winner 2008 Finalist 2009, 2011, 2012 MoneyExpert Sector: Financial services Online aggregator, allowing consumers to compare and purchase financial products Exit: Sale to financial buyer Date: Q Gross IRR: 53.1% Gross return: 2.41x iipay Sector: Business services Payroll software and services for administrating complicated international payrolls Partial exit: (Proceeds equivalent to approx. 25% of investment held pending tax efficient distribution) Date: Q Equity Gap Fund of the Year: Shortlisted 2012, MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014

19 Section 10 Tax considerations The tax benefits referred to below (other than those referred to under Investing through a SIPP ) are not available to an Investor who elects to make an investment in shares which do not qualify for EIS relief. Please note that EIS reliefs will only be available following the Subscription for shares in qualifying Investee Companies. However, prospective Investors should note that no assurance can be given that EIS qualifying status will be maintained or achieved for the requisite period. Please note that the conditions for relief and the circumstances in which reliefs are available and can be withdrawn are complex and subject to change. The descriptions and examples below are intended only as a brief summary of the rules, are not exhaustive and do not constitute, and should not be considered as, tax advice. Anyone considering investing in the MMC Funds should seek appropriate professional advice before making an investment in any MMC Funds. EIS tax reliefs Assuming the qualifying conditions for EIS investing are satisfied, there are four main types of tax benefits available to Investors. Below is a summary of the benefits from income tax relief and capital gains tax relief. Income Tax Relief 30% of the amount invested (up to 1 million per tax year) Relief against income for losses arising on disposal of shares for which income tax relief obtained Potential for loss relief against income for losses arising on disposal of shares where deferral relief only claimed, subject to an overall cap on income tax reliefs Capital Gains Tax Reliefs Tax-free capital gains on the investment (if held for minimum 3 years) Unlimited deferral of capital gains tax on gains made in the 3 years prior to and one year after the EIS investment Relief for any capital losses which may be offset against other capital gains Income tax relief Qualifying individuals can claim income tax relief of up to 30% of the amount subscribed for EIS-qualifying shares. The maximum subscription is a total investment of 1 million in a tax year and the income tax relief is restricted to the amount that reduces the individual s income tax liability to nil. This tax relief is calculated on a per investment basis. This means that whenever an investment in EIS-qualifying shares is made, qualifying individuals will be able to claim income tax relief up to 30% of the amount invested in that Investee Company, subject to such annual limit. Some or all of the income tax relief obtained may be withdrawn and fail to be repaid if, inter alia, during the Three Year Period, the shares are sold or otherwise disposed of, or the Investee Company loses its EIS-qualifying status. EIS investments made at any time within a single tax year may be carried back and treated as if they were invested in the previous tax year, subject to the maximum permitted subscription for that year and any other subscriptions made for that year. Example of income tax relief Mr X is an additional rate tax payer (the additional rate being 45% for 2013/14). He is looking to reduce his income tax and invests 100,000 in EIS qualifying companies through the MMC EIS Fund. By doing so, Mr X is entitled to reduce his income tax liability by 30,000 (30% of 100,000) in the tax year that the Fund subscribes for shares in the EIS qualifying companies. Alternatively he can claim for the amount subscribed, or part of it, to be carried back to the previous tax year, subject to the maximum permitted subscription for that year and any other subscriptions made for that year. MMC Ventures limited EIS Fund Information Memorandum 2013 /

20 10 Tax considerations Tax-free capital gains Any capital gains made on the disposal of EIS-qualifying shares (where EIS income tax relief has been given and not withdrawn) are tax-free, provided that the EIS-qualifying shares have been held for the Three Year Period. Where EIS income tax relief is withdrawn, or the shares are disposed of within the Three Year Period, then any capital gains arising will be chargeable gains and will be subject to CGT in the normal way. Example of capital gains tax relief Mrs Y is an additional rate tax payer who would prefer not to pay capital gains tax on investments she makes. She invests 100,000 in EIS qualifying companies through the MMC EIS Fund and receives her 30% income tax relief. After holding the shares in the companies for the minimum Three Year Period, the Fund starts selling its portfolio Investee Companies. Any gains that are made are tax free and Mrs Y may not need to declare these gains on her tax return, depending on other disposals made in the year when the Fund shares are disposed of. CGT deferral relief An Investor with a taxable capital gain from the disposal of any asset can reinvest the chargeable gain in EIS-qualifying shares and claim for the gain (and so the tax payable on that gain) to be deferred until the shares are disposed of or qualifying conditions cease to be satisfied (although it may be possible to defer the gain again if a new EIS-qualifying investment is made). To benefit from this deferral relief, the Investor must have been resident or ordinarily resident in the UK both at the time when the chargeable gain on the disposal of the assets occurred and at the time of making the reinvestment. The financial limits that apply to EIS income tax relief do not apply to deferral relief so that this applies to any amount invested in EIS-qualifying shares if there are gains to be reinvested. The CGT Deferral rules can therefore, in applicable cases, contribute significantly to the funding of the EIS investment by reducing the effective cost to the individual making the investment. To obtain CGT Deferral, the investment in EIS-qualifying shares must be made in the period beginning twelve months before and ending three years after the date of the asset disposal that has given rise to the capital gains tax liability which is to be deferred. Example of CGT deferral relief Mr Z is an additional rate taxpayer who makes a capital gain of 550,000 in December 2013 on the sale of an investment property. He has not used his annual capital gains exemption of 10,900 and has capital losses brought forward of 40,000, so he only needs to claim deferral relief of 499,100 to reduce his capital gains for the year to nil and utilise his annual exemption. In February 2014 he invests 500,000 in the MMC EIS Fund which will apply his investment in making subscriptions for shares in qualifying companies within 3 years of December Thus he will have reinvested 499,100 of his gain within 3 years of it arising in shares qualifying for EIS relief and will be able to claim to defer capital gains tax of 139,748 (being 28%) for 2013/14 once he has the forms EIS3 for the investments made. The deferred gain will become chargeable as shares in each of the investee companies are disposed of at the rate prevailing at the time of disposal, which under current legislation will be 28% for an additional rate taxpayer. (Mr Z may also be able to make a claim for EIS Income Tax Relief in respect of his subscription for shares and qualify for a capital gains tax fee disposal of the EIS qualifying shares). Loss relief Capital losses realised from an investment in EIS-qualifying shares may qualify for loss relief (net of initial income tax relief). Losses arising on disposal of shares where deferral relief only has been claimed will come within the cap on reliefs available against income tax relief effective for losses arising after 5 April The cap applies to restrict the amount of losses for which income tax relief may be obtained in any tax year to either 50k or 25% of income, whichever is the greater. Losses arising on disposal of shares where income tax relief has been claimed and retained will continue to be eligible for uncapped offset against income tax of the year of loss or income tax of the last preceding year on making a claim. Alternatively, as with all capital losses, they can be offset against capital gains of the same year or carried forward indefinitely. 20 MMC Ventures limited EIS Fund Information Memorandum 2013 / 2014