Par EIS Fund

The Par EIS Fund invests predominantly in Scotland, Northern Ireland and the north of England. It focuses on technology companies with defensible intellectual property and an initial track record of sales, which are in the “equity gap”: too large for business angels but too small for most private equity investors.

The Par Investor Network, a group of c.200 experienced business angels, contributes new deal flow, helps with due diligence, provides guidance and experience to investee companies and co-invests alongside the fund. 

Since 2012 the EIS Fund has invested £35.4 million into 54 investee companies and has generated exit proceeds of £6.1 million, with a remaining portfolio balance of £42.4 million (March 2024). Note, past performance is not a guide to the future.

• Target pre-tax return of 15% IRR over an expected holding period of 6-8 years – not guaranteed
• Targets a portfolio of 8-12 companies to deploy within 12 months of the subscription date – not guaranteed
• £25,000 minimum investment – you can apply online

The manager

Based in Edinburgh, Par Equity LLP (“Par” or “Par Equity”) is an early-stage venture capital firm seeking to back innovative, high-growth technology companies. It made its first investment in March 2009 and launched the EIS fund in 2012, originally formed to invest alongside the Par Investor Network. 

To date, Par Equity, including the Par Investor Network and institutional money managed by Par, has invested £190.7 million into EIS-qualifying companies, and generated exit proceeds of £137.6 million, with a remaining portfolio balance of £183.2 million. Past performance is no guide to the future.

Par Equity’s investment team consists of 14 investment professionals: five partners, two investment directors, five investment managers, and two analysts. The team includes professionals with backgrounds across consulting, corporate finance, and the technology industry. The members of the Par team have personally invested c.£7 million in the portfolio (March 2024), and all the Partners invest into the EIS Fund every year on identical terms to investors. This aligns their interests with those of investors.

The investment team is also supported by the Par Investor Network, a group of over 200 experienced business angels. The Par Investor Network can provide Par with additional deal flow and support with due diligence as well as funding. 

Before your subscription is invested into shares, the cash will be held by the custodian, Kin Capital Partners LLP. Shares will be held by the nominee, KCP Nominees Limited. 

Investment strategy

Par seeks to invest in companies with collaborative management teams that are developing innovative, hard to replicate solutions across sectors such as: enterprise software, health care and medical devices, industrials and space, energy and resources, food security, and digital media and entertainment.

Par looks for large addressable markets with limited barriers to international scale and strong commercial demand and market pull, targeting monthly revenues of at least £20,000. Historically, 60% of the investments made by the EIS fund were generating monthly revenues of more than £20,000 at the time of investing. Par Equity tends to participate in investment rounds of between £0.5 million and £10 million. 

Par invests in companies across the UK, but with a bias towards Scotland, Northern Ireland, and the north of England. Par believes that, together with its Par Investor Network (detailed below), its regional focus means that it may see opportunities at what it considers more realistic valuations and which may be missed by more London-centric managers. Scotland-based portfolio companies can also benefit from the support of the Scottish Investment Bank and Scottish Enterprise. 

The manager also feels that the involvement of the Par Investor Network gives it an edge. The Network’s 200+ members are experienced business angels and have deep expertise in their respective fields, so are often approached by entrepreneurs operating in their sector, giving Par access to pre-screened businesses that competitors might not see. After investment, Network members often serve as Par’s representatives and observers on investee company boards as well as providing ongoing mentoring through to exit.

Portfolio

Investors in the Par EIS Fund can expect exposure to a target portfolio of 8-12 underlying companies. To date, the Par EIS Fund has invested £35.4 million into 54 companies. 

The companies outlined below are historic investments made by the Par EIS Fund in its previous iterations and give a flavour of the types of companies a new investor might expect.

Heliex Power

Based in East Kilbride, Heliex Power (“Heliex”) helps companies generate their own low-cost electricity through excess heat and steam. 

It has created a patented turbine design, built to work with “wet steam”, a common factory byproduct. This relatively lower-temperature steam contains water droplets, making it difficult to use with traditional turbines. However, Heliex’s more robust design has addressed this. The system can be easily retrofitted and gives industrial plants the flexibility to use the energy themselves or sell it back to the grid. 

Par first invested in September 2021, as part of a pandemic rescue deal alongside the Scottish government. Following the deal, a new chair and CEO were appointed, and finances have since improved, with revenues doubling to £1.5 million in 2023. 

The Par EIS Fund has invested a total of £1.6 million over four rounds. The combined holding is currently valued at £8.1 million (March 2024). Past performance is not a guide to the future.

Phlo – recent investment

Phlo is a digital pharmacy that makes managing medication easier.

Its founder, Nadeem Sarwar, launched the business after years of struggling to fit regular prescription collections in his busy lifestyle. Instead of in-person collection, Phlo styles itself the UK’s first digital pharmacy offering same-day medication delivery.

The business connects directly with GP practices around the UK. Patients simply link their NHS account to its application and Phlo handles the rest. Once a prescription request is received, Phlo automatically passes the prescription on to the GP for approval before beginning the dispensing process and handing the medication to one of its trusted delivery partners.

Today, the business works with more than 89,000 registered patients in the UK and recently expanded into private healthcare, following the launch of Phlo Clinic. 

Par Equity led a £9 million funding round in March 2024 alongside Scottish Enterprise and Thairm Bio. The EIS Fund invested £700,000 as part of this raise.

Current Health – example of previous exit 

Founded in 2015, Current Health brings together remote patient monitoring, telehealth, and patient engagement into a single platform for healthcare organisations.

Patients wear a wireless device (armband) that continuously gathers data. The platform uses that data to provide real-time insights into a patient’s condition – optimising patient outcomes and cost of care and helping health organisations deliver safe and effective care at home. 

13 of the largest healthcare systems in the US and UK – including Mount Sinai and Dartford & Gravesham NHS Trust – use Current Health to manage patient care. 

Par EIS invested in Current Health’s seed round in April 2017, selling its stake for 8.3x cost in November 2021 when the company was acquired by US retail giant Best Buy for $400 million. Past performance is not a guide to the future.

Adaptix – example of previous failure

As with any early-stage investment, not all will work out as planned, Adaptix is an example.

Adaptix develops 3D imaging technologies that are significantly safer, smaller, and more affordable than traditional radiology systems. However, after the CEO’s departure, the business was acquired by existing investor, Avingtrans, in September 2023. Avingtrans had been an early backer of the company and had been supporting the business through a loan facility for several months. 

Par invested £267,000 through the EIS Fund and the position was realised for a 0.2x return on cost. 

Performance 

Since inception in 2011 the Par EIS Fund has invested £35.4 million into 54 investee companies and has generated exit proceeds of £6.1 million, with a remaining portfolio balance of £42.4 million (March 2024). 

The chart below shows the average performance of the total subscribed into the Par EIS Fund in each full tax year from 2013/14 (or from when the current strategy was adopted if later) to 2023/24. 

The chart is based on the latest valuations provided by the manager, expressed on a £100 invested basis. Please note, individual investor portfolios’ performance will deviate from the average.

Performance per £100 invested per tax year (Par EIS Fund) 

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.

EIS investments are high-risk and should only form part of a balanced portfolio. As must be expected with early-stage investments, some or even all of the companies in the portfolio could fail: the fewer the companies included in the portfolio, the higher the risk of loss if things don’t go to plan. You should not invest money you cannot afford to lose. 

There is no ready market for unlisted EIS shares: they are illiquid and hard to sell and value. There will need to be an “exit” for you to receive a realised return on your investment. Exits are likely to take considerably longer than the three-year minimum EIS holding period; equally, an exit within three years could impact tax relief. 

To claim tax relief for a knowledge intensive EIS fund you will need an EIS5 certificate. Certificates can be used once the fund has invested 90% of its capital, which it is required to do within 24 months of the close. Tax reliefs depend on the portfolio companies maintaining their EIS-qualifying status. Remember, tax rules can change and benefits depend on circumstances.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Charges

A summary of the main charges is shown below. Some of these will be payable by the investor, whilst others by the investee companies. The investment may have additional charges and expenses: please see the provider documents, including the Key Information Document, for more details.

Our view 

The fund has a small and close-knit investment team yet, through the Investor Network, it can access a pool of c.200 experienced investors. They can provide deal flow, help with due diligence, take board seats, and actively engage with and add value to investee companies.

The fund’s focus on regions of the UK underserved by the wider venture capital community has the potential to create what Par sees as attractive entry valuations and a destination for entrepreneurs seeking funding, particularly within Scotland, Northern Ireland, and the north of England.

Par’s investment approach has led to total exit proceeds topping £137.6 million on an investment cost of £190.7 million, and a portfolio balance of £183.2 million. However, investors should note the total Par Equity track record, which includes the Par Investor Network and institutional funds managed by Par, has historically generated superior returns to the EIS fund. Past performance is not a guide to the future.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.