The Endeavour Ventures Follow-On Portfolio Service will invest in high growth companies with a bias towards technology companies. This will be later stage funding (for EIS) with the aim of being the last or next-to-last EIS round. Companies will be chosen from previous Endeavour investments or from cherry-picked opportunities from well connected EIS managers. Endeavour brings a very strong track record for a new fund, with 38 exits (11 successful) with an aggregate MoIC of 5.3x.

Why invest

Positives

• Strategy: Investing in follow-on rounds into a portfolio of high-growth companies.

Issues

• New product: While Endven has an excellent track record overall, this is a new service.

The investment manager

Positives

• Team:  The team has a wealth of experience, with investment, entrepreneurial and operational backgrounds.

Issues

•  Team size: While the team seems adequate for current operations, it may need to grow if the service is successful.

Nuts & bolts

• Duration: The fund is evergreen, with no formal closings, and investors simply participate in the deal flow after investment.
• Diversification: The manager aims to provide 6-8 investments in each tax year.
• Valuation: Updated quarterly based on price of latest investment round.

Fees

• Fees: Other than performance fee, all fees are charged to the investee companies.
• Performance fee: Charged at 20% on aggregate returns over 140% of subscription.

Risks

•  Target returns: The target IRR of 20% ‒ including tax reliefs (roughly 3x net investment in six years) ‒ suggests a medium-to-high risk investment strategy.
• Companies: Supplying risk capital to high-growth, mostly technology, companies with good evidence of growing revenue. There will be a spread of company returns, as the successful ones will do very well, but those that fail may do so completely.