GBI Magazine recently partnered with Hardman & Co to host a webinar to showcase their New Entrants Network in the EIS sector. Opportunities such as webinars provide a platform to enable investors to get to know the managers and their prior investment experience. In many instances, the people behind new funds already have expertise and an outstanding track record and this should be of great interest to investors and advisers alike.
In conversation with Martin Fox as Chair were Mark Beaumont of Eos Advisory, Paul Tselentis of 24Haymarket and Parminder Basran of VGC Partners. A former New Entrant, Haatch Ventures was invited back and Fred Soneya outlined what has happened in three years with the right approach and the right expertise.
MF: Can I start with a personal question to Mark, as you are rather well known in another field outside business venture capital. So, can you briefly tell us about that?
MB: I always joke to friends that I spend half my life in lycra, half my life in a suit. My former life and some of my time now is still spent as a professional cyclist. My background is in private equity and that is what brought me into how can I build a business involved in impact investing, companies that are genuinely making a difference in the world addressing global challenges? But yes, when I meet people, they normally know me from riding a bicycle as opposed to this side of my work.
MF: Tell us about Eos?
MB: Eos was founded in 2014, initially a syndicate of a group of friends which grew quite organically. There’s now 60 in the syndicate and the membership is global. I’m bringing online our first EIS fund and working with passive investors as opposed to active investors. For the first time we can have conversations like this with the advisory market. Seed stage investing is very collaborative and our focus is on life sciences, clean technologies, renewables, including issues around climate change, food, and water security. These are the areas we’ve seen greatest growth and success within our portfolio. We also invest in efficiencies in industrial processes because we believe that as well as being impact investors in future solutions and future technologies, you must engage with the world that exists and find efficiencies.
If you’re backing innovation that has a global marketplace, then there are significant opportunities and hopefully commensurate returns for that early-stage risk. We’ve had significant growth and success within the current portfolio, and we’ve had a successful first raise of our innovation fund this summer and we’ll be doing a second raise of the Innovation Fund in April 2022. The innovation fund is the second significant way that we can invest alongside the syndicate but also important to us are venture partnerships. So, that’s inward investment from bigger commercial markets in the US, Germany, Japan, and we work very hard to bring in investors at seed stage from the markets that these companies need to grow into. That approach de-risks for our fund investors and for our syndicate investors because you’re bringing in smart money to build companies from the start. We work closely with our businesses; it is patient capital and we are in for the long term.
MF: Over the last seven years Eos has made 14 investments? None have failed and most are showing strong valuation growth. So, what is it that you are doing differently?
MB: A 14 not-out, is not a sustainable track record and I think everyone needs to acknowledge the risks in seed stage investing, but it’s not through luck that the companies we are currently invested in are thriving and growing. We’ve had to work with management teams, change boards, change business models. We’ve had to completely pivot companies, especially over the last couple of years, to make sure that they’re relevant and growing and have a quick route to market. So, the 14 companies we are invested in, over half of them have seen follow on investment series A and B. In 2017, we invested in 3FBiO, which is the company behind what is now called Enough-Food as the trading name. We could follow our investment, which is important and then this year it gained market traction with both Marks & Spencer’s in the UK and Unilever globally, giving them the ability to raise a Series B, which was a 51 million euro raise with a group of Dutch investors. So that’s about 20 times growth from our initial involvement. What is important is the amount of work with our investment director and our advisory group over the years. About 40 percent of our portfolio are in the life sciences, especially blood diagnostics. We’ve got a strong group of oncology businesses and they’ve all got different capital journeys and it’s important that we know how to support them over the long term, but we’re typically with them between five and eight years.
MF: If you talk about making investments that positively impact the world, with the current trend moving towards more and more sustainable investing, how do you fit in with that?
MB: Impact Investing means different things to different people. To Eos we are firmly motivated by innovation that can change the world in a positive way. I mentioned before the fact that if you are addressing global issues around quality of life, disease diagnosis, the one the example I gave before with 3FBIO is about such things as, can we create enough protein for a growing world population? These are significant challenges, and there’s huge opportunities for investors to see significant returns as well. I don’t think it should be a trade off between purpose and profit.
Continue reading article…