As 2023 draws to a close, it’s time to look back on this year, and it’s fair to say that it has been quite a busy one for SFC Capital!
In 2023 alone, the team has closed an impressive 105 investments, underscoring SFC’s position as the most active seed fund and a key backer of innovation in the UK. These included 85 new company investments from our SEIS fund, and 20 follow-on investments in top-performing portfolio companies.
A pivotal event this year was the implementation of the new SEIS rules, which enabled us to raise our largest SEIS fund to date, increase our ticket size and invest in more mature companies. For the past three years, we have lobbied hard for these extensions that dramatically improve the risk profile of SEIS investments, making the scheme more attractive than ever for both investors and companies.
In terms of returns, 2023 proved to be exceptional, with 5 exits generating an average return of 14x (excluding tax relief). These included a 49x secondary sale of our shares in Cognism in August, and the acquisition of ORB Innovations by Glidewell Dental in May. These exits helped us build a robust track record of cash exits for our fund investors. With a total of 22 cash returns to date and an average return of 8x, the SFC portfolio is showing that SEIS and EIS are not just tax reliefs but represent an excellent asset class when approached with diligence.
A major highlight has been partnering with Innovate UK in the Future Economy Programme. This collaboration, along with partnerships with top UK universities, has diversified our deep tech deal flow. Investments in Clean Tech, Life Science, and Medtech companies have risen to 50%, a significant increase from 15% in 2020. We believe these sectors are central to groundbreaking innovations and returns in the next decade, as software becomes more commoditised and capital shifts to science-based solutions addressing global challenges.
Furthermore, SFC was honoured to win prestigious awards, including SEIS Fund of the Year and Impact Investor of the Year at the EIS Association Awards in June. SFC was also named Most Active Investor in the Regions at the UKBAA Awards a few weeks later in July.
These achievements, against the backdrop of a relatively depressed market, stand as a testament to the dedication and hard work of the team, and validate the model that we have been diligently building over the last 10 years.
Looking ahead, SFC Capital is poised to double down on its growth as market conditions improve in 2024, which should only mean more capital invested and more exits from the portfolio, so watch this space!
Capital at risk. For professional investors only.
Past performance is not indicative of future performance.
Tax benefits are subject to individual circumstances. Subject to changes.
