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SFC's 2021: The Year in Review

Joseph Zipfel, Chief Investment Officer With a background in investment banking and a Master's from ESCP Europe, Joseph manages SFC Capital's investments, investor relations, and portfolio company fundraising strategies since 2014.
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SFC Capital’s busiest year yet: £15m in 94 companies, exits, milestones, and fighting for SEIS.

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.

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DISCLAIMER:
SFC Capital Ltd (SFC) is an appointed representative of SFC Capital Partners Ltd which is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom (FRN 736284). This website is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell any securities.

Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Investment in SEIS/EIS eligible companies should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment opportunity will be achieved or that the strategies and methods described herein will be successful. The investment products cited herein may place capital at risk and therefore investors may not get back the full amount invested. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. Companies’ pitches for investment are not offers to the public and investments can only be made by members of SFC Capital. SFC Capital takes no responsibility for this information or for any recommendations or opinions made by the companies. Neither SFC Capital nor any of its employees provide any financial or tax advice in relation to the investments and investors are recommended to seek independent financial and tax advice before committing. This website is not directed at or intended for publication or distribution to any person (natural or legal) in any jurisdiction where doing so would result in contravention of any applicable laws or regulations. No warranties or representations of any kind are expressed or implied herein. This material is confidential and is the property of SFC Capital.

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