Performance networks and patient capital : A Q&A with Andrew Noble

by | Nov 15, 2021

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Par Equity has built up a remarkable performance record in recent years, in particular in delivering cash returns to investors. Alex Sullivan caught up with Partner Andrew Noble to talk about their success and what’s at the core of it.

AS: Par Equity has really established an impressive track record, certainly not one-offs in terms of consistency and longevity which is the important thing for advisers and their clients in the EIS space. bearing in mind those figures and returns does that place Par Equity as a leader?

AN: The team at Par Equity has done an excellent job over the past 13 years to build a very good performance track record in delivering returns for investors both in terms of the size of the returns and consistency as well. We’ve backed 63 companies to date, and we’ve realised 22 of those. We’ve returned 3.4x money and a 25% ROI back to investors and that’s excluding EIS relief. From what we’ve heard, it’s definitely near the top of EIS fund performance. It is hard to say as these aren’t publicly disclosed but the feedback from our investors and the wider community is very positive.

AS: How can you ensure this performance can be sustained this year and moving forward?

AN: We are holding a portfolio of 41 companies. Broadly speaking, it’s performing really well and we’ve been pleased with performance over the last 18 months, particularly given the Covid pandemic.

We measure our portfolio across a number of metrics. One of these is the companies in our portfolio that have had unsolicited acquisition interest in the last three months. We’ve been measuring that since April of last year. Generally speaking, around 25 to 30% of our portfolio is receiving acquisition interest on an ongoing basis. That’s a very encouraging signal for us that the portfolio is doing the right things and certainly getting the interest of acquirers. We have a couple of companies right now that are going through the exit process so that’s encouraging. In terms of how we can sustain that performance going forwards, I think it boils down to three things;

  • Focusing on the north of the UK. We have a geographical specialism here versus a lot of other venture capitalists (VCs) across the UK.
  • Leveraging networks. We have a very sophisticated angel network around Par Equity and indeed a broader advisory network as well. It’s leveraging that network to our best interests. Put simply, we get better deal flow, better due diligence and better portfolio management as a result of that network.
  • Investment focus. We are increasingly B2B deep tech investors focused on the seed to series A investment stage. We really think that is a sweet spot for us both in terms of the opportunities we are seeing but also the stage of companies. We think that this is one of the reasons why we can continue to sustain that performance.

AS: For readers or advisers who might not be completely familiar with this, can you talk us through why these areas are so important?

AN: If we consider the north of the UK, when you look at the VC landscape there are around 300 to 350 VCs in the UK but more than 80% of them are based in London. Only 9% are based in the north of the UK. When you contrast that to the data that’s being produced by the Scale Up Institute, there are actually one and a half times more identified scale ups based in the north of the UK than there are in London. We must also consider that VCs are operate network driven models, it is about who you know to identify the emerging stars in terms of perspective investee companies. It’s important to track them for a period of time before feeling comfortable enough to invest into them.

Secondly, given our network across the north of the UK and the supply and demand of capital, we believe we can get into high-quality opportunities at a sensible valuation. In terms of the network and the expertise around us, there are countless examples in our portfolio where our network has helped us originate new opportunities, assisted with due diligence and also on the portfolio management side. When it comes to portfolio management, we are a team of 17 at Par Equity including 10 on the investment team. However, we’ve also got 31 operating partners on the boards of our portfolio companies who are members of the Par investment network. These are individuals who are helping to make and shape the portfolio companies as they grow.

Thirdly, another important point is around the deep tech focus. I think one of the key aspects is that we look at a trade-off between the growth of a company and the defensibility. When you’re investing into deep tech it requires a bit more patient capital. The companies have been through a deep R&D phase. They are still building out their product market fit and selling into customers but it does take a little bit longer for them to get scale. The important factor is that they have intellectual property (IP) underpinning what they are doing. Because of our B2B focus, we find that a lot of the prospective buyers for the types of companies we are backing often start off as their customers first. So, as they grow and increase their customer base what they are doing is increasing their pool of prospective acquirers at the same time. This works very nicely as a model.

AS: What about Scottish enterprise, does Par Equity work with them?

AN: Yes, we work with Scottish Enterprise a lot. We are a Tier 1 co-investor partner of theirs and a valued investment partner. We’ve invested in several deals with them across Scotland and made several exits so we’ve been able to return money back to Scottish Enterprise as well. We have a very good relationship with them and will continue to work with them.

AS: Looking ahead in the EIS industry, given the incredible disruptions in the last two tax year-ends, how do you see the2021/22 tax year-end panning out for advisers, their clients and the industry?

AN: We are very optimistic about it. EIS fund raising at the end of the 2019/20 tax year took a hit because a lot of that money comes in February to March time. Clearly, with the Covid pandemic on the horizon at that point, there was a slowdown in fundraising.

However, in our experience there is still an appetite for investing into early-stage businesses. The tax relief is still there, and I think many people have taken a step back over the last 18 months to reflect on the industries that are doing well and where they want to deploy their capital. One of those industries is technology, which across different sectors has performed extremely well. We’ve seen that on the listed markets, but also private companies which has been particularly interesting. The feedback we get from advisers right now is that there is still a strong appetite for EIS and a strong appetite to invest in early-stage technology businesses that are disrupting their relevant industries or sectors.

AS: One of the ubiquitous terms we are hearing is around ESG and sustainable investing. what is Par Equity’s approach to this?

AN: It is becoming increasingly important for all of us in the industry to think about this much more sharply. We are trying to take a leading role in this together with some of our peers. We are helping with an initiative called ESG VC, and we have a seat on the steering committee with Berengia, Atomico, Lakestar, Astanor, Talis and Seedcamp and supported by the BVCA as well. This initiative seeks to standardise ESG reporting in early-stage businesses so that it is fit for purpose rather than necessarily being cumbersome or overwhelming for young companies that are very much resource constrained. We also want to make sure that if there are several VCs that have invested in to one particular company, that such a company isn’t being inundated with different types of ESG Reporting requirements.

The initiative itself is supported by more than a 100 VCs across the UK, Europe, and the USA. We are rolling it out to our own portfolio companies and indeed we are encouraging other VCs to get behind it and do the same. We think it is a great thing for the industry because although we are not holding ourselves at Par Equity out as impact or ESG investors, what we are doing is investing in the next generation of technology companies. We want to apply ourselves in the right way and help build better businesses over the next five or ten years.

AS: What are the most common questions you get from advisers and how can they reach out to you to help them?

AN: Performance is all very well and good but at the end of the day we are a relationship- driven business. Investor servicing, whether that’s for an adviser or the underlying client, needs to be very strong. Advisers often ask about is our deployment and the speed of that, as it can cause some friction with clients. They care deeply about EIS 3 Forms and the speed at which they are returned to clients. These administration points might appear to be minutiae, but they’re a very important part of the service and we must get this right.

In addition, having the information there once you invest into a fund and being able to see the semi annual reports and latest valuations and providing this in a portal that is easy to use and clear is also important. We have been working on a number of these things to ensure that we are providing a complete solution for advisers.

In terms of deployment, when we go out to market our mandate is to invest into eight companies in a target period of 12 months. Over the last five years, we have surpassed that and on average we invest into eight companies in just shy of nine months. Deployability for us is not a problem as we have a good deal flow. In terms of the EIS 3 certificate and the return of these we have been investing in our technology systems so that we can automate that process and improve it. We’ve taken it down from about 129 days on average to around about 60 days from the date of the investment to the investor having received it. We’re working hard in the background to ensure we are giving an excellent service and experience for investors.

AS: For those who want to learn more how can they get in touch to talk about Par Equity?

AN: The easiest way is to drop us an email at and myself or Pauline Cassie, our Investor Relations Director, will pick up any enquiries or arrange calls with any advisers or clients. We’re very happy to walk advisers through what we are doing. Also, as well as our semi-annual reports, we invite all advisers to our webinars, whether they have clients in our EIS fund or not. In the webinars our entire investment team talks through detail of our portfolio companies and upcoming investment opportunities too. It’s a good way for advisers to become familiar with our approach and what’s coming up on our radar as well

Click here for more information about Par Equity 

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