The high-profile article in the Business section of Saturday’s Times set out to explain how Covid-19 is a nightmare for new businesses – as if the obvious needed stating.
However, there was a negative whiff to the piece which raised the odd hackle in the EIS/VCT sector.
Martin Fox, PR consultant to many of the leading funds found the article “disappointing and very one sided. There are some managers and investee companies who are doing fine, but those aren’t the stories that the press want just now.”
James Faulkner of Vala felt “It’s obviously part of the campaign to get the government to act beyond the measures already put in place that aren’t, to a greater extent, able to support start-ups. The banks are struggling to deal with the workload and even then these types of businesses wouldn’t necessarily be eligible for the loans anyway (which is why they need equity capital).
“As far as Vala is concerned we still completed a reasonable funding round before tax year end in support of our portfolio companies and managed to get the investors invested before the end of the tax year. “
Sunil Shah of o2h conceded that “Things have cooled; however, as we are in the therapeutics sector we did get some additional funds and interest – I think COVID-19 has made people appreciate the value of science.”
Dr Reuben Wilcock, Ventures Director at Blackfinch Ventures told us “These are certainly unprecedented times with investors in EIS and VCTs holding back, concerned around their personal circumstances and those of underlying portfolio companies.
“But let’s not forget the very DNA of an entrepreneur, that unconditional optimism that makes these talented individuals capable of adapting and evolving rapidly in any situation. After all this is precisely what they’ve been doing since the moment they founded their companies.
“We’ve been supporting our 13 portfolio companies to efficiently pivot their products and optimise their operations. BookingLive normally offers online booking solutions, but in a single weekend developed a platform that helps match PPE supply to demand, becoming a winner of the Covid19 Global Hack as a result. Auro, the personalised fitness app, has been signing new partnerships almost daily with closed gym groups and influencers who want to distribute their content. Tended, a wearables company, have developed a product that alerts workers who move within 2 metres of each other, tracking and warning about potential infection events.
“And let’s also not forget that historically the UK’s success has been built on innovation driven by some of the hardest times we’ve faced. Necessity, as they say, is the mother of all invention. Of all firms, the types of early stage companies funded by EIS and VCTs are best placed to react quickly. Yes, some will fail, but we expect others to emerge stronger, fitter and leaner than ever before. Overall portfolio returns are nearly always driven by the biggest winners, so we only need to see a handful of companies be boosted by their actions in the current times to retain performance.”
The message would seem to be to keep the faith; as the old saying goes, “Form is temporary, class is permanent”.