A new ‘Institutional Angel’ fund exemplifies the UK’s continued ability to innovate in enterprises – TheTechWarrior

The UK Enterprise Investment Scheme has been a powerhouse for UK startups as it enabled Angel investors to invest in a highly tax efficient manner.

It was launched in 1994 and was intended to encourage investment in small privately held companies. As Wikipedia will tell you, by the end of the 2014-15 tax year, a total of £14.2 billion had been invested under the scheme, for example in about 25,000 companies.

The policy has since been imitated and copied by various European governments. But with the UK’s cultural and historical risk appetite and investing in assets beyond ownership, it has been a boon to tech companies and the UK tech industry has expanded tremendously.

While not always perfect – many entrepreneurs sometimes find problems with the whole thing – at least EIS and SEIS have poured a lot of Seed money into the tech ecosystem over the years since it was first launched. The result has led many startups to get their first breakthrough and start attracting institutional investment from venture capital.

A prime example of this is Portfolio Ventures (PV) which has now closed its second Angel Fund (which they claim was oversubscribed) where many of the investing Angels are doing so under EIS.

This means the fund will have over £5m to invest, between £100k-£500k cheques, in UK early stage tech companies ranging from pre-seed to Series A. The fund’s focus will be on Fintech, Insurtech and SaaS .
The 2nd PV Angel Fund is supported by some of the more active angels from the UK including Chris Adelsbach, Will Neale, Michael Pennington, in addition to founders of Credit Kudos, FreeAgent, BrandWatch, Wayve, Passfort, ContetCal, Griffin, Bibliu, Rahko and fixflo. In addition, a number of partners from other VC firms are investing personally, as well as NEDs and former CEOs of John Lewis, AXA and BBC, Portfolio Ventures says.

The new fund has made its first three investments, along with Hoxton Ventures in RePlan and Juno, while also investing in Passionfruit alongside First Minute Capital, Playfair Capital, FJ Labs and scouts from Accel, Notion and Atomico.

PV draws on its community-oriented culture, with a network of founders, investors and others in addition to PV founders WIll Martin and Will Brooks who founded the fund in 2014. It’s sort of an “institutional angel” that taps into an LP community and a wider network of investors and founders. James Pringle, founder of Pringle Capital and co-host of the Riding Unicorns podcast, recently joined PV.

Martin and Brooks say they’ve helped raise funding for more than 200 companies from seed to Series A, including Tractable, ManyPets, Marshmallow, OLIO, Pensionbee, Attest, Smart, Ably and Credit Kudos, among others.

“We are delighted to have closed our 2nd Angel Fund as we continue to invest and support some of the UK’s leading entrepreneurs in scaling up. PV has always been about network and accessibility,” Will Brooks said in a statement.

During a telephone conversation, Pringle explained to me how the fund works.

Start Funding Club (SFC) is the financing services provider and all investors are committed to the fund and Portfolio Ventures are discretionary fund managers using a pot of capital contributed by these investors.

This means that PV is “like a mini VC, but with angels instead of LPs.”

“As an EIS fund, the main beneficiaries are individuals. So our fund is quite unique in that we only have individuals in our fund, and it’s made up of what we consider to be some of the best angels and founders in the UK,” he told me.

“So we really put an emphasis on quality. And that comes from “Will and Will,” who founded Portfolio Ventures, starting out as an Angel Network, and doing a lot of deals since 2014. They have made many deals with these very active angel investors. And now it’s in a fund structure so we can access certain deals because some deals are very competitive and only really available to funds. So [our Angel investors] benefit from going through a kind of fund model.”

He also added that this is the first fund over £5m meaning PV can do “tickets so usually from around 250k. So in most of the deals we do we are up about third. the cap table.”

At a time of macroeconomic downturn, it appears that Portfolio Ventures’ second fund has arrived just in time to take advantage of continued innovation in the UK.