Founders Factory SEIS
This fund will invest in pre-seed companies that are eligible for SEIS, and enable investors to claim a suite of tax reliefs including but not limited to 50% income tax relief on up to £200,000 invested, and 50% exemption from capital gains that arise in the same year. Tax reliefs are subject to status and change.
- Portfolio of eight companies
- Limited duration - the fund opens to investment on 29 July, and closes on 30 September 2024.
- Investment cap of £1.690 million.
- Minimum investment of £10,000.
The opportunity
This fund, powered by Founders Factory, presents an opportunity to invest in a portfolio of eight promising new pre-seed companies in the B2B SaaS sector.
Founders Factory will support these companies with a programme designed to help them kickstart their growth at the earliest possible stage, as well as ready them for introduction to its contacts at top technology companies, VCs and corporates.
Watch our recent webinar with Founders Factory CEO, Henry Lane Fox
Founders Factory
Founders Factory is a global technology operating and investing company founded in 2015 by Brent Hoberman and Henry Lane Fox, part of the IPO-exited team at lastminute.com.
It is best known for operating technology venture studios, pre-seed investment programmes and accelerators. It operates these around the world in various sectors, alongside exceptional entrepreneurs and some of the world’s biggest corporations. It has worked with some of the biggest names including L'Oreal, Aviva, and Marks & Spencer, in total raising more than $280m for the increasing number of programmes it oversees globally.
Founders Factory has a direct and indirect portfolio of more than 400 companies across all its operating vehicles, nearly 80 of which it started in its venture studios.
It has direct holdings in 148 accelerator companies. This cohort of 148 has collectively raised £460m in investment and has an average MOIC of 2.29x (June 2024).
It has seen 13 exits, one of which represented a Multiple of Invested Capital (MOIC) of 26.73x.
Case studies
This will be Founders Factory’s first B2B SaaS specific programme, but it counts companies that are B2B SaaS and B2B more generally amongst its top performers.
These include:
- Storyblok: MOIC of 28.41x (not exited)
- Flourish 26.73x (exited)
- Monolith 12.71x (not exited)
(Figures accurate as of June 2024)
Case study: Flourish
Founders Factory invested in 2016. MOIC: 26.73x (exited).
Founders Duncan Clark and Robin Houston started Flourish, a data visualisation platform that allows anyone with a spreadsheet to make world-class interactive data visualisations, maps, stories and presentations. In 2022, Flourish was acquired by Canva.
How Founders Factory helped
- Helped develop first minimum viable product
- Helped strategically on devising the business model
- Introduced team to first referenceable clients
- Introduced the team to seed investors
Founders Factory programme for investee companies:
The programme itself will be split into:
- Workshops and workshop circles - functional leads will deep dive into venture build fundamentals for B2B SaaS Companies and follow up with workshop circles for context questions and peer learning.
- “Go Bespoke” - each week, time will be taken by Founders Factory’s functional lead to spend 1-1 time with each portfolio founder so that advice and help can be bespoke.
- Focus on funding - Founders Factory will offer a general pitching school, including 1-1 pitch classes. As part of this there will be an opportunity to meet potential later stage investors, including VC panels and a showcase event at the end of the programme.
- Sector-specific talks and interactive sessions - each week there will be firesides, panels and lunch and learns, all opportunities to hear from and meet successful founders, industry leaders and investors in B2B SaaS.
- Community events - this includes socials, drinks, Slack and WhatsApp groups and other networking events to develop a true sense of community amongst the cohort. Workshops on venture build fundamentals for B2B SaaS Companies will cover subjects such as:
- B2B SaaS Product Fundamentals: Use design thinking methodology to build, measure, iterate and learn. How do you roadmap? How do you prioritise? What is an MVP? How can you become the voice of the customer?
- B2B SaaS Growth Fundamentals: Developing a B2B Strategy: Customer Segmentation. Value Proposition Design. Buyer Journey Mapping. Pricing & Revenue Model. Objectives & Measurement. Acquisition Strategy. Retention Strategy.
- B2B SaaS Metrics: Ensure you have a clear grasp of relevant metrics such as MRR/ARR, Churn, CAC:LTV, CACpayback & the levers impacting them.
- Talent: how do you attract and retain a world class B2B SaaS team.
- Incentives: understanding ownership to better incentivise talent and attract fundraising.
- Productivity: how to use no-code and automations in your business.
- Data/AI: what is a data an AI strategy and how do you build one.
- Venture 101: an introduction to venture capital, what you need to know to better fundraise. In the final two weeks of the programme there will be a shift to fundraising.
It’s expected that investee companies will have progressed over the three months of Founder’s Factory’s investment to be ready, or close to ready, to their next fundraising round. The programme will end with an end-of-cohort showcase day, with each portfolio company pitching to a group of relevant downstream investors. Founders Factory has put on well over twenty showcase and portfolio days and routinely gets over 120 potential investors to attend.
Timelines
SEIS tax relief
The Seed Enterprise Investment Scheme (SEIS) is a government scheme that offers investors a suite of tax relief to incentivise investment in startups at pre-seed or seed stage.
The tax reliefs available to SEIS shareholders are:
Income tax relief of up to 50%
A £100,000 investment can result in a £50,000 reduction in your income tax bill for that year. To benefit from this, you need to have enough income tax liability and hold the shares for a minimum of three years. You can invest up to £200,000 a year.
Maximise relief with carry back
You can apply relief to the previous year if you still have the allowance available. By using the allowances for both years, you could invest up to £400,000 at once. This also allows you to apply the tax relief to the previous year's tax bill, potentially reclaiming taxes you've already paid.
Reduce your overall capital gains bill
Capital Gains Reinvestment Relief allows you to reduce your Capital Gains Tax (CGT) by up to 50% when you invest in SEIS-qualifying companies, provided you have claimed income tax relief in the same year.
Tax free capital growth
You normally don't pay Capital Gains Tax (CGT) when selling SEIS shares if you've claimed income tax relief on them and the companies still meet the requirements.
Inheritence Tax Relief
SEIS investments qualify for 100% relief from inheritance tax under current legislation, provided that the investment has been held for at least two years, it is still held at time of death and remains unlisted. There is no limit on the amount that can be sheltered from IHT through investment in SEIS Qualifying Companies, and this is not impacted by any increase in the total Investment value over time.
Loss Relief
In the event of negative performance there is some return on the downside through loss relief, on a per Investee Company basis.
The net amount of the loss (i.e. after deducting any income tax relief obtained on making the investment) can be offset against taxable income in the year in which the loss is made (or can be carried back to the previous tax year). If the loss is to be offset against a separate gain, this can be done in the tax year in which disposal occurs, or (in full or in part) in a subsequent tax year.
Fees
Please see breakdown of fees to investors below:
Setup Fee: 3% + VAT, drawn upfront from Subscription.
Annual Management fee Years 1-3: 2% + VAT, retained upfront and drawn down monthly from Subscription. Years 4-7: 2% + VAT, deducted from distributions to Investors. Years 8-10: 0.75% + VAT deducted from distributions to Investors.
Performance fee: 20%, with no hurdle on a deal by deal basis.
Adviser Fees for authorised financial advisers can be facilitated on Application, as agreed with Investors, and in line with COBs rules.
VAT Will be applied where required by prevailing laws.
After you invest and contact us
SyndicateRoom, as Investment Manager, will have ultimate responsibility for managing Investments over their lifetime and for ensuring that there is:
Care for client money and assets in keeping with the FCA’s CASS Client Money & Assets rules and other requirements.
Monitoring the portfolio of Investee Companies, including seeking rights to appoint a board member and observer rights.
Ongoing reporting.
An online 24/7 dashboard through its website with real-time information on performance and SEIS3 forms.
9-5 weekday customer care and access to information.
