The Oxford Technology Combined SEIS and EIS Fund (OT(S)EIS) has issued its Quarterly Report for the period to 31 Mar 2018.
In summary, it reported:
By 5 April 2018, OT(S)EIS had completed 96 investments in 31 companies.
The figures for the fund as a whole since its inception are as follows –
- Gross amount invested by OT(S)EIS: £4.59m
- Cash back to investors via tax refunds: £1.83m
- Net cost of these investments after tax reliefs: £2.76m
- Fair value: £9.82m
- Tax free gain (on paper only so far): £7.06m
No allowance for fees has been included in the figures above.
Obviously nothing really counts until there are exits. In a sense, the share price achieved at exit is the only one that matters apart from the original purchase price of the shares. And exits are typically expected in a 5-10 year timescale. But the most recent share price paid is a fair guide to a true valuation.
Possible future investments
At the time of writing, we are working on several possible investments, including:
1. A specially developed plant which contains a substance which greatly lowers blood sugar levels. We believe that this would be particularly useful for pre-diabetics, of whom there are more than 200m worldwide. They would need to have one meal per week containing this ingredient.
2. A novel technology which uses light to measure the mass of proteins in solution, and to determine whether proteins have interacted or remained separate. One scientist who saw this was very excited and said that it would enable his PhD students to complete their experiments in weeks rather than years.
Those whose money is in the fund will receive their pro-rata share of these investments if and when they are made. Those whose money arrives after these will receive their pro rata share of the next investments which are made.
News in brief
OTM China now has an office on the 33rd floor of a building in Shanghai. The views are spectacular especially at night. Chenjie works full-time in China and is likely to become the interim CEO of Sime China. Sime has a method for the early diagnosis of lung disorders in premature babies. No less than 66% of babies in China are born by C section, some of whom also have breathing problems. So Sime has found its technology welcomed in China, and the plan is to create a separate company, Sime China, in which Sime UK will have a share, and to raise funds in China to finance this.
Run3D has had a very good quarter, and the number of clinics in operation has increased to 11.
There was also a long conference call with a company in China who asked if Run3D could support 1,000 clinics. The current plan is that the owner of this company will make a visit to the UK in May to see the Run3D system in action.
Designer Carbon Materials signed a contract with a US company, LocatorX, and received 100,000 founder shares, agreeing to supply N@C60 for the atomic-clock-on-a chip application. There will be two way exclusivity – DCM will be the sole supplier to Locator X and will not supply anyone else for this application.
Ducentis has made excellent progress with its science. It has been able to show very significant impact on a wide variety of immune cells and has a range of alternative molecules with varying affinities. This will be very useful as the drug moves through the development pathway.
Lupe has successfully raised all of the £650,000 which it sought to pay for the tooling for the manufacture of its vacuum cleaner – confirmed in independent tests to be the best and most energy-efficient vacuum cleaner in the world.
Production will be in China and the plan is to launch Lupe in the UK at the end of 2018. There will likely be a kickstarter campaign in autumn 2018 where people will be able to buy a Lupe at half price by paying up front and waiting a few months for delivery (similar to the strategy adopted by Elon Musk for Tesla). Many thanks to all who invested.
Dark Beam has launched its crawlers searching the Deep Web and now has a database of more than 20m stolen credit cards which are for sale on the web. It has also achieved its first revenue from a bank for a trial contract. It is now launching its main product; software which analyses the vulnerability to cyber attack of a website using exactly the same techniques that a hacker would use.
This information will be valuable to many, including to the insurance industry which is is not sure how to quote for insurance against cyber attack. Dark Beam successfully raised capital in this quarter.
We invested in LRESystems and Atelerix in January and both are making great progress.
Oxford Technology manages two funds:
1. OT(S)EIS – The Start-up Fund: Investors’ money is invested over 3 years – Approx. 1/3 (less fees) in SEIS investments in year 1, 1/3 in EIS investments in year 2 in those of the earlier SEIS investees which are doing well, and the same again in year 3. SEIS investments are very high risk and some failures are to be expected, although there have been very few so far which is why the track record is so good. So it takes 3-4 years before all the tax reliefs are obtained, which does not suit everybody.
2. OTEIS – The Development Fund: Investors have all their money invested within one year in EIS investments, mainly in earlier OT(S)EIS investments which are developing well. So this fund has a lower risk profile than OT(S)EIS and investors can claim their tax reliefs more quickly.