EIS March 2023

Continuing Professional Development

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Continuing Professional Development

See pages 3, 9 and 10

See page 10

This guide is accredited for structured CPD by the CII and PFS and readers of the guide can claim up to TWO HOURS of CPD for each hour spent reading the guide, up to a total of four hours.

In order to claim CPD, readers will need to complete a short online test.

For more details on claiming CPD go to:

intelligent-partnership.com/cpd

See page 9

To find the content relevant to each of the learning objectives, simply check the top right of each article where there is a colour bar corresponding to the learning objective(s) it relates to. Each learning objective is assigned it's own colour in the left hand column below.

See pages 3, 4 and 6

See page 10

See pages 3, 4, 6, 7, and 11

This publication contains general information only and the contributors are not, by means of this publication, rendering accounting, business, financial, investment, legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Neither the contributors, their firms, affiliates nor related entities shall be responsible for any loss sustained by any person who relies on this publication. The views and opinions expressed are solely those of the authors and need not reflect those of their employing institutions. Although every reasonable effort has been made to ensure the accuracy of this publication, the publisher accepts no responsibility for any errors or omissions within or for any expense or other loss alleged to have arisen in any way in connection with this publication.It is not an offer to sell, or a solicitation of an offer to buy, the instruments described in this document. We recommend that prospective investors consult their own suitably qualified professional advisers concerning the possible tax consequences of purchasing, holding, selling or otherwise disposing of any of the investment options in this publication. .This publication is based on the authors’ understanding of the structure of the arrangements detailed, the current tax legislation and HM Revenue & Customs practice as at March 2023 which could change in the future. Intelligent Partnership is not authorised and regulated by the Financial Conduct Authority and does not give advice, information or promote itself to individual retail investors. It is the responsibility of readers to satisfy themselves as to whether any arrangement contemplated is suitable for recommendation to their clients. Tax treatment depends on an investor’s individual circumstances and may be subject to change. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. This publication is not included in the CLA Licence so you must not copy any portion of it without the permission of the publisher. All rights reserved.

Case study: Open Bionics

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Case study:

Open Bionics

Healthcare

Its flagship ‘Hero Arm’ has lights, feedback vibrations, and different functions that allow the user to grasp, pinch and hold, as well as do fun stuff like high-fives, fist bumps and give the thumbs up.

The Hero Arm has secured commercial licences from Disney, Marvel and Pixar to design arms for children with themes from Star Wars, Frozen and the Marvel Universe. The latest version is a Black Panther “Wakanda Forever” Hero Arm which is launching soon.

The Hero Arm has already been supplied to two Ukrainian soldiers.

This investment area lies at the heart of what drives Downing - investing in what matters.

THE COMPANY IS ON A MISSION AND IT’S ALL IN THE NAME:

aiming to be affordable to all

advanced engineering, giving children and adults a new superpower

It’s a fantastic initiative Open Bionics has embarked on. The team’s ethos has been clear to see since we first invested in 2017, so it comes as no surprise that they are supporting war veterans in this way. We look forward to continuing to support Open Bionics in both its impact initiatives and business growth.

EIS deal flow building pipelines for funding success

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EIS deal flow building pipelines for funding success

Deal flow, the process by which EIS investment providers like ourselves identify and evaluate potential investment opportunities, is an essential component of building an investment strategy.

It is this approach that can help to deliver consistent returns and the best outcomes for investors.

Our filtering process separates potential investee companies into two broad categories:

Here at Oxford Capital we typically screen over 1,000 deals per year but back only a handful of these. We invest in 4-6 new companies annually, making the investment rate for our EIS offer just 0.5%.

Our quality control process relies on robust filters and, as it progresses, extensive due diligence, including analysis of the prospective investee company's technology and IP, commercial traction and financials, quality of management team, competitive environment, risks, and growth potential.

Those displaying early signs of growth, product market fit, track record of delivery/customers and strength of founder/management team.

High potential companies – those that have ground-breaking tech or intellectual property, breaking a large market with a world class technical team.

Ongoing relationships contribute significantly to keeping the deal-flow pipeline full and as part of the Oxford tech cluster this ensures the team gets access to high quality deals from across the region, and across the UK.

A plentiful deal flow is essential, as deployment timelines for investing our clients’ funds into underlying EIS-qualifying companies depend on the ongoing availability of well-researched deals that are ready to go across the year.

The qualification clock for the tax reliefs does not start until this takes place. Without well-stocked deal pipelines, there is a danger of insufficient quantity and quality of deals to deliver timely investment returns.

What’s more, while some investors may decide to keep their powder dry when conditions are less favourable, many are still looking to grow their wealth and have tax-planning that still needs to be done. It’s worth remembering that the investment horizon for EIS is generally between five to seven years. As a result, whenever the investment is made, it is likely to pass through several economic cycles, benefitting from good times to come.
There's certainly no denying that current conditions have been damaging to some businesses, with reports that company insolvencies in December 2022 were 76% higher when compared to December 2019 (pre-pandemic) and 32% higher than in December 2021.

But there is still an abundance of exciting EIS opportunities. While that’s no surprise to those with experience of this market: some sectors are more recession proof and can be part of the diversification strategy of an EIS manager. Long-term care and consumer staples are good examples of sectors where services remain in strong demand, whether or not economic conditions are optimal.

Downturns can also be beneficial to small, young companies with the ability to pivot, take advantage of new opportunities and disrupt existing markets, aided by lower overheads which allow the creation of lower-cost products and services.

Those challenges can lead to the availability of more talent, as larger companies shed jobs; and reduce competition, as risk aversion deters some companies from entering the market.

After two decades in the EIS market, at Oxford Capital we’re excited about our current pipeline, with a strong deal flow of companies in lucrative sectors such as fin-tech, AI & machine learning, digital health and legaltech. We are targeting deployment in 3-5 companies ahead of this tax year end,
which will equate to up to 35% of an investor’s subscription*.

oxcp.com
swakefield@oxcp.com

Business Development Manager,
Oxford Capital

Unfortunately, individual retail investors are unlikely to hold a large enough stake to change the outcome of these votes. But, on the other hand, in the vast majority of takeovers seen in the first half of 2021, there was a substantial bid premium where the share price increased during the offer period. The highest was an eye-watering 79%, although more commonly, it was in the lower, but still very pleasing 20% - 50% range.

role,

Intelligent Partnership