John Davies, Head of Growth Capital at Seneca Partners, explains the investment strategy of Seneca Growth Capital VCT.
Since we launched our VCT offering in August 2018, we haven’t been hanging around. We’ve raised more than £6 million, made five investments and paid dividends in 2019 totalling 3.0p.
Seneca Partners, the managers of Seneca Growth Capital VCT, have extensive experience in growth capital. We have raised and deployed more than £60 million of EIS and VCT growth capital funds into 45 SME companies across 85 funding rounds since we undertook our first EIS growth capital investment in 2012.
One of our differentiating features is our base in the North West. As a result of this, we enjoy strong regional deal flow, particularly in the North of England, which means we get to see some deals that other investors don’t see. This can be useful, especially at a time when many VCT investors are seeking to increase the diversification of their VCT investment portfolio.
Another unusual feature is that Seneca’s growth capital team invests across both unquoted and AIM-quoted companies. We intend that our VCT will also invest in both markets (most VCTs specialise in one or the other). Being able to access AIM deal flow provides another source of opportunities and allows us the flexibility to invest wherever we see the best opportunities.
Our VCT is focussed on providing growth capital to well managed businesses with strong leadership teams that can demonstrate established and proven concepts in addition to growth potential. All five of the investments made by Seneca’s VCT since launch have been co-investments alongside EIS funds we also manage. We believe this allows the VCT to participate in a higher number of investments of a larger scale into more established businesses than would have been possible on a standalone basis.
Investors choosing to invest with Seneca this year will of course get exposure to the existing five investments that have already been made in addition to the new investments that Seneca’s VCT will make this year. The five existing investments made by Seneca’s VCT include one AIM-quoted company and four private companies and in our view all have exciting futures:
- SilkFred is a fast-growing online marketplace for independent ladies’ fashion brands. The business was founded in 2011 with the aim of creating an efficient marketplace for emerging fashion designers to bring products to market and establish their brand in the sector. The business now works with about 600 independent brands, selling to over 500,000 customers.
- Fabacus Holdings is an independent software company that has developed a technology solution aimed at bringing transparency to supply chain networks, with an initial focus on resolving the interaction and information flow between global licensors and their licensees.
- Old St Labs is a provider of cloud-based, supplier collaboration tools for large, blue-chip customers, enabling them to manage key supplier relationships and strategic project work. The core product, Vizibl, seeks to make supplier collaboration much more straightforward, with key focus on compliance, cost savings, increasing efficiency and driving growth across their clients.
- Qudini is a B2B software company that provides a software solution for appointment bookings, queue management, event management and task management in the retail sector – enabling businesses to improve shop floor operations by managing staff activity, breaks and performance, and by assigning tasks at store or head office level.
- SkinBioTherapeutics is an AIM-quoted life science company focused on skin health. SkinBioTherapeutics' platform applies research discoveries made on the activities of lysates derived from probiotic bacteria when applied to the skin.
We are pleased with the diversity and opportunity for growth that exists within Seneca VCT’s current portfolio of investments and we’re looking forward to adding new investments in addition to developing this existing portfolio with confidence.
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