After a record 2020, the pressure was on to keep up the pace in 2021. I am pleased to say that the team overdelivered and made 2021 our busiest year at SFC since we started almost ten years ago.
In 2021 alone, we have invested a total of over £15m in 94 companies, making SFC the most active seed investor in the UK by a long margin, and one of the most active in Europe – just behind Enterprise Ireland and BPI France.
This included 65 new investments from our pre-seed fund (SEIS), which backed a wide range of innovative ventures across Fintech, Life Sciences, Green Tech, Prop Tech and many more sectors that we believe will see tremendous growth over the coming years. This was a record number of new investments, and we were pleased to be named SEIS Fund Manager of the Year for the second consecutive year.
Our growing EIS fund was also able to provide follow-on capital to 29 of our portfolio stars, including Humanising Autonomy, Novai and Vertical Future. Re-investing in our best-performing alumni has become a core part of our strategy, and we look forward to growing our EIS fund in 2022 to provide more growth capital to the most outstanding businesses in our portfolio of now over 300 companies.
In 2021 our team has gained recognition from key industry players, having been named SEIS Fund Manager of the Year at the EIS Association Awards and Most Active Investor in the Regions at the UK Business Angels Association Awards – the latter being a testament to our commitment to support regional entrepreneurship. The majority of our investments this year were made outside of London and the South East, and all four UK nations are now represented in our portfolio!
Most notably, we were named by Sifted as the 3rd most active investor in female entrepreneurs in Europe (#1 in the UK)! This is a title that we are very proud of as we pledged eighteen months ago to make 50% of our new investments in female-led businesses, a target which we have reached this year and that we will strive to beat going forward.
This year was also a coming of age for our portfolio, with several successful exits from the 2016, 2017 and 2018 cohorts. It has been a great feeling to give back to those investors who trusted us in our early days, when all we had to show for ourselves were a few slides and plenty of drive.
The average multiple of these exits was 14x, delivering an IRR* of 74%. This figure excludes tax relief, which will double investors’ returns in the case of SEIS. This demonstrates the great return potential of successful pre-seed investments – particularly when boosted by SEIS and EIS – which gives us even more confidence in our strategy of being the first investors in high potential companies and generating a string of large exits for our investors.
Finally, SFC is increasingly establishing itself as a leading voice in the industry, and we are making sure that the challenges and opportunities of seed investors are heard. Our CEO Stephen Page made multiple appearances in the national press this year, and we published a report on the state of the seed stage ecosystem in partnership with Beauhurst, which showed a decline in the number of first-round investments in the UK. This report has been the basis for several lobbying initiatives to support angel investments and expand the SEIS and EIS schemes in order to develop a thriving ecosystem for early-stage entrepreneurship in the UK.
Next year, we will celebrate SFC Capital’s 10th anniversary, which will be a momentous occasion to celebrate our journey from a small angel club to one of the most active seed funds in Europe. In the meantime, we want to pursue our growth and keep meeting and investing in some of the most talented and ambitious innovators in the UK.
Capital at risk. For professional investors only.
*Internal Rate of Return calculated based on total funds invested and realised and unrealised gains excluding tax relief.
