Demand for tech businesses, set to emerge strongly from the crisis, booms – with EIS investments surging
- Spike in investments in medical testing, healthcare and children’s entertainment and education businesses in the last three months
- Tax-efficient investment platform Wealth Club sees 110% increase in EIS business during lockdown
Tech-led businesses, whose models have been further validated by the Covid-19 crisis, have seen unprecedented demand from investors in the last three months, according to tax-efficient platform Wealth Club. Companies which have enjoyed particularly strong demand range from those involved in medical testing and healthcare, to those focused on education and entertainment for children.
Between 6th April and the end of June, £10.8 million was invested into young innovative, EIS qualifying businesses, through Wealth Club’s platform, compared with £4.9 million in the same period last year, an increase of 110%.
EIS deals which have seen strong demand since April through Wealth Club include:
- Bond Healthcare – a digital platform for the medical testing industry. A £400,000 EIS fundraising round sold out in less than a minute after going live
- Acamar – the production company behind the children’s series, Bing, successful both in the UK and abroad. As well as being a global TV success, broadcast in over 120 territories, Bing is also an online phenomenon with 2.2 billion YouTube views and during lockdown was adding around 40 million a week. Acamar has raised £9.4 million through the Wealth Club platform. £1.8 million of this has been raised during the COVID crisis.
- Azoomee – a global media company focusing on kids educational content that has 60 million users worldwide saw its subscriber numbers rise by 40% in March.
- Gobsmack – a company delivering digital wallet technology to allow its blue-chip clients to engage and reward their customers.
- Visionable – a video collaboration platform for healthcare teams, billed as the ‘Zoom for medics’, now reportedly mulling a £100 million raise to help support growth in the UK and overseas.
- Sofant – Edinburgh university spinout Sofant Technologies Limited is at an advanced stage of development of a patented 5G-ready smart antenna.
Alex Davies, CEO at Wealth Club, comments: “COVID has turned even the staunchest technology Luddites into online shoppers, viewers and users, meaning demand for innovative businesses, where technology is at the heart of what they do, has rocketed.
“Current demand is largely for technology-led companies whose business models have been further validated by the crisis – such as those in healthcare, online education and entertainment, and e-commerce.
“Many of these businesses were growing rapidly before the crisis. The impact of the pandemic has simply turbocharged their business models. People are being forced to learn online, have meetings online, treat patients virtually and so on. The partial adopters and the uninitiated suddenly see this as a good experience, perhaps even better than face to face. As a result, investment opportunities in businesses that facilitate these things are much sought-after.
“Unlike in the US, where there are numerous listed technology businesses for investors to get their hands on, the UK indices are very under-exposed. The FTSE 100, for instance, has just 0.26% exposure to the technology sector.
“However, for experienced investors who are prepared to take more risk and invest in earlier stage unquoted businesses, there are a plethora of fantastic opportunities and the chance to potentially find the next big thing.
“The good news is that many of these opportunities qualify for EIS relief. This magnifies returns when things go well and reduces the downside when they don’t. It also keeps any gains you make out of the taxman’s hands. And with taxes likely to increase, this will be a very important consideration for many.”
