The Nexus Appeal

As a refresher, in my previous December 2020 article, I reported how I first came across the concept of the Enterprise Investment Scheme (EIS), back in 2002, whilst I was studying for my Chartered Accountancy exams with PwC. Now almost 20 years later, and as Managing Director of the quietly-growing Nexus Investments’ Scale-Up Fund (recently doubled AUM for the 2nd year in succession, and with a very promising record emerging as the only specialist EIS Fund focussed solely on Data-Digital-Ed Tech-Health) I continue to find its attractions more pertinent than ever before.

Having last time run through how we have achieved successes for EIS investors “on the way out” of their investments alongside us, the purpose of this short case study (number two of two) is to give you some real life examples of who and why some or our more recent growing subscriber base have selected us “on the way in.”

Case Study 1 – The Direct Investor

An active NHS consultant seeking “the themes of tomorrow”

In mid-2020, around six weeks into first lockdown, I received an email one day, from a Doctor, a Consultant, based in Scotland. He had been in discussion two years previously with a prospective financial advisor, who had made him aware of the potential usages of EIS, in terms of financial planning for him his wife and their young children. Both were working in senior roles within the NHS and financial services, in their early 40s, they were in the fortunate position of shortly to pay off their mortgage. The advisor had encouraged them to put money into one or more of his “recommended” EIS or VCT funds. The consultant explained to us, that they had decided against working with the prospective advisor two years previously because a) every area recommended was new to them b) he had the sixth sense that the advisor, perhaps, viewed EIS as a “thing” solely for tax purposes, so c) could not answer properly questions about which industries the underlying deployments would go into, or what the investments actually sought to achieve (outside of the tax aspects of IHT, capital gains mitigation, income tax etc).

Two years later, now working long overtime hours fighting COVID on the front line, this particular individual had now paid off the mortgage. Both he and his wife were now earning income (due to the long overtime) that was causing issues with their pension position, both lifetime cap and annual allowances. Remembering the EIS chat two years previously, the Consultant decided to go to the EISA website which lists out all providers in the space. The couple are in their 40s, rather than 50s, 60s or 70s; therefore still working, but tech natives; with young children engaged in remote and digitised learning every day c/o lockdown; and seeing digital methods as well as focus on health and nutrition increasingly prevalent every day at their own places of work. This meant the Doctor was ideally looking for a precise, sector-specialist EIS fund manager, in tune with and backing these trends of tomorrow. In his mind, he wanted to find an Investment Group focussed on positive investment into promising companies in the Data, Digital, Ed Tech & Health Tech areas. His attitude was that risk goes hand in hand with potential reward, so for them EIS would not be a “capital preservation”- led strategy, but a combination of tax-efficiency allied to an opportunity to be a participant in Venture Capital. He discovered that our fund was the only one that eared to have a focus solely on these sectors by theme. As distinct from being a generalist fund manager.

Having contacted us to find out more, we went through a number of zoom related meetings, which ultimately led to that investor deciding that we were the absolute fit from him and his wife’s point of view. He subscribed to our Fund in the summer of 2020, and we have already deployed over 60% of his capital for him.

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