The Eos Innovation Fund is an Alternative Investment Fund, which will invest, primarily, in Scottish-based unquoted science, engineering or technology companies with an impact aim. The target return is 3x invested capital. Returns will be focused on capital gains, and investors are unlikely to receive any dividends, although this is not excluded. The fund is evergreen, with investment in tranches.

Why invest

Positives

• Strategy: Exposure to a portfolio of early-stage science, engineering and technology companies with an impact focus.

Issues

• Sector diversification: While the strategy focuses on four areas, healthcare has received ca.50% of investments.

The investment manager

Positives

• Team:  The team has a wide range of startup and investment experience.

Issues

• Track record: While there are good early signs, the track record is limited, with few exits.

Nuts & bolts

• Duration: The fund is evergreen with approximately annual closes; investments are made on a per tranche basis.
• Diversification: While Eos gives a minimum of 5 investments, 7-8 is perhaps a more realistic expectation.
• Valuation: Updated semi-annually following IPEV guidelines, with additional adjustments as required.

Fees

• Fees: A combination of direct fees and company charges. Three years of annual fees are effectively deducted from the subscription.
• Performance fee: Charged at 20% on aggregate returns over capital invested, on a per company basis.

Risks

• Target returns: The target return of 3x years suggests a high-risk investment strategy.
• Companies: Supplying risk capital to very early-stage technology companies. There will be a spread of company returns, as the successful ones will do very well, but those that fail may do so completely.

Download the full report