The Haatch Ventures Enterprise Investment Fund is an unapproved collective EIS portfolio, which will provide a portfolio of investments in unquoted early-stage companies. The target return is 10x the capital invested. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. The fund is evergreen.

The report goes into details of how the investment process works, sourcing and decision-making, exit strategies, post-investment governance and monitoring, fees and more. It also includes Hardman & Co’s unique fee calculation table, allowing advisors and investors to properly investigate their effect.

Why Invest

Positives

• Strategy:  Exposure to a small portfolio of digitally-enabled companies focused on the team’s areas of experience.

Issues

• Track record: Only a small number of exits to date, mostly predating the EIS fund, but the results so far look promising.

The Investment Manager

Positives

• Team:  The team brings very strong entrepreneurial experience, having started, grown and sold several businesses.

Issues

• Expansion: Haatch is expanding rapidly. While the team has experience of managing growth, it brings some risks.

Nuts & bolts

• Duration: The fund is evergreen, with a target of quarterly closes, or whenever sufficient funds are raised.
  
• Diversification: The manager expects to provide four to six investments for each closing, with deployment within 12 months.
  
• Valuation: Usually changes at next financing, or on writedown.
  

Fees

• Fees: All fees are charged directly to investors.
• Performance fee: Charged at 25% on aggregate returns between 1x and 5x, and 30% on returns thereafter.

Risks

• Target returns: The target return of 10x suggests a high-risk investment strategy.
• Companies: Supplying risk capital to early-stage, digitally-enabled companies at the start of commercialisation. There will be a spread of company returns, as the successful ones will do very well, but those who fail may do so completely.