Deepbridge Innovation SEIS

The Deepbridge Innovation SEIS offers investors an opportunity to secure potentially attractive returns by investing in a diversified portfolio of seed-stage innovation companies, whilst taking advantage of the considerable income tax, capital gains tax, and inheritance tax benefits available under the Seed Enterprise Investment Scheme.

Providing seed investment to emerging technology-focused companies, the Deepbridge Innovation SEIS seeks to fund selected investee companies that possess an exciting new innovative approach to meet the existing and emerging requirements and demands of both corporate and consumer markets. The overarching focus of the Deepbridge Innovation SEIS is to offer investors a diversified exposure to companies engaged in a variety of technologies, including:

  • Energy and resource innovation
  • Medical technologies and diagnostics
  • Business enterprise information technology
  • Data analytics
  • Transport & automotive innovation
  • Instrumentation and control technologies
  • Advanced materials and manufacturing
  • Robotics, machine learning, and artificial intelligence.

Specifically, the investment strategy of the Deepbridge Innovation SEIS is to invest in a diversified portfolio of a minimum of five investee companies, each of which will focus upon the development and/or application of technological innovation to address an identifiable market demand or consumer need. 

 

Sourcing opportunities

Deepbridge will source investee opportunities from an extensive dealflow network that potentially includes research and innovation organisations, commercial enterprises, academia, venture capital institutions, as well as Governmentbacked development funding agencies. Two specific dealflow relationships are with:

Sci-Tech Daresbury

Established in 2006, as a national innovation and science campus, Sci-Tech Daresbury is internationally recognised through the reputation of the STFC Daresbury Laboratory and Cockcroft Institute in leading-edge research and development. The Campus operates large-scale facilities used by many UK universities as well as an increasing number of industrial companies (e.g. IBM, Unilever, Bentley Motors, BAE Systems).

Sci-Tech Daresbury is home to over 100 high- tech companies at Daresbury employing over 600 people in areas such as advanced engineering, digital/ICT, biomedical, energy, and environmental technologies. These vary from start-up companies to more mature SMEs to international corporates such as IBM, Atos and Hitachi. About one in six companies have their headquarters outside the UK.

Sci-Tech Daresbury enables companies at the campus to benefit from a collaborative environment and provides access to top-class facilities with the aim of providing companies on the campus with the best possible chance of succeeding and growing.

Since the advent of the Campus in 2006, Sci-Tech Daresbury has seen a wealth of highly innovative companies join, bringing expertise in areas ranging from medical devices and diagnostics to data analytics, control technologies to instrumentation, renewables to advanced materials.

We Are Nova

We Are Nova describes itself as a digital development organisation that specialises in creating and growing digital start-up businesses. Working with digital innovations, We Are Nova confirms that it operates a partnership-style approach to helping entrepreneurs from an initial idea to discovering its market and building the product.

We Are Nova states that they work with companies to explore ideas and accomplish three primary things;

  • Prove that a real unmet need or problem in the world has been identified
  • Identify initial customers who will help test and provide future feedback on the product
  • Develop a concise business plan.

With over 30 companies developed so far, We Are Nova works at the initial stage to assess ideas, identifying if there is a potential market for the product, undertaking customer research and developing a business plan. Beyond this, We Are Nova, with support from Deepbridge, will work with investee companies with the aim of producing prototypes and then developing commercial products, as appropriate.

Through prototyping, We Are Nova’s experienced team assesses which solutions could solve the identified problem. Following collation of real user feedback and data, We Are Nova will also look at the business model and start to understand how they can turn the original idea into both a scalable and sustainable company.

One the product is created, We Are Nova’s digital and commercial experts seek to commercialise and further grow the companies. 

 

SEIS Tax Reliefs

SEIS relief is available to investors in respect of each investment in an Investee Company made by the Deepbridge Innovation SEIS, by reference to the date the investment is made. Under SEIS, the main tax advantages that may be claimed by a qualifying investor are as follows:

  • 50% income tax relief up to a maximum investment in SEIS of £100,000 per tax year per individual.
  • Capital gains that are reinvested in SEIS shares qualify for a 50% exemption from CGT.
  • Tax free gains. There is no capital gains tax liability on gains on the first disposal of shares which have been held for 3 years in SEIS qualifying companies, on which SEIS income tax relief has been obtained.
  • 100% inheritance tax exemption after each individual investment has been held for at least 2 years.
  • Income tax carry-back relief. Investors can claim income tax relief for the tax year in which they invest in the underlying companies, as well as the tax year immediately preceding the investment. This enables the investor to claim tax relief in the period(s) most advantageous to him/her.
  • Loss relief (providing potential total tax relief of up to 72.5%). A loss on any qualifying investment in the portfolio, irrespective of the overall performance of the portfolio, can be offset by individuals against income of the tax year of loss, or the previous year, or against capital gains of the tax year of the loss and future years.

 

The 100% Rule

The Deepbridge Innovation SEIS is an investor fee-free Seed EIS opportunity. Investors are therefore not charged any fees at point of investment. Upfront and ongoing fees are paid by the Investee Companies: this advantage allows investors to enjoy 100% of SEIS tax benefits and to have 100% of their investment actually put to work earning potential investment returns.

 

The Target Return

The investment objective of the Deepbridge Innovation SEIS is to generate substantial tax-efficient mid-case capital growth of 200p for every 100p invested, over a minimum 5 year period.

Exit events will be sought at the earliest opportunity after the third anniversary of the investment made.

 

Who Is The Deepbridge Innovation SEIS Targeting?

The Deepbridge Innovation SEIS is targeting UK taxpaying individuals:

  • Seeking an attractive, medium term investment opportunity
  • With income tax liability in the preceding and/or current tax years
  • With a large capital gain
  • Who will benefit from IHT relief.

The minimum individual investment in the Deepbridge Innovation SEIS is £10,000. Investors should note that their investment comprises of shares in small unquoted companies (often with high risk) and that they are unlikely to have access to their capital for a minimum of 6 years from the date of application. Please refer to the risk section for further information.

 

Risks

Investors should be aware that investment in smaller unlisted companies (including SEIS qualifying companies) carries with it a high degree of inherent risk whether or not it is done through a diversified portfolio and regardless of any tax advantages which such an investment might carry and/or any steps taken to attempt to mitigate that risk. Investors are unlikely to have access to their capital for at least a period of 6 years. Investors should be aware that thier capital is at risk and they may lose all or some of their investment.  Please refer to the Deepbridge Innovation SEIS Information Memorandum for further information regarding risks. 

Information on this webpage relates to and is provided by Deepbridge Advisers Limited.

The content of this webpage is for intermediary use only and should not be construed as financial advice.