IW CAPITALSUMMER

NEWSLETTER2016

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LUkE DAvIS: CEO COMMENT

2016 – A Year Like No Other for British Business

In one of the most momentous years in the history of British politics, 2016 has delivered a spate of hugely significant events that have permanently altered the way in which we as a nation are governed, and equally, the way in which we conduct business. Labelled by our then Prime Minister David Cameron as the “biggest democratic exercise” in UK history, on 23 June more than 33 million people across the British Isles voted to decide the UK’s status in the European Union. Thereafter, with Brexit emerging victorious, our new Prime Minister Theresa May has been appointed, an entirely new Cabinet has been instated and interest rates have fallen to 0.25%. In the imminent aftermath, market sensitivity naturally ensued, with all eyes on Westminster to see how government policies will change under the new regime. While Theresa May is yet to invoke Article 50 – thereby officially commencing our two-year exit process from the EU – the second half of the year will most likely see the initial round of reforms introduced by our new Chancellor, Philip Hammond.

The first half of 2016 was a period of steady growth for the UK economy, giving the private sector valuable momentum to carry into the current period of transition. In the second quarter of the year, GDP grew by 0.6% – this was up from the 0.4% growth experienced in the first three months of the year and 2.2% higher than Q2 of 2015. It also marked the 14th consecutive quarter of positive GDP growth for Britain’s economy. The figures are encouraging, and moreover, heavily reliant on a collective of over 5.4 million SMEs, which account for 99.9% of all private sector businesses. In February 2016, former Chancellor of the Exchequer, George Osborne, stated that SMEs were “leading the charge in rebuilding the country’s economy”, adding that they were now “the backbone” of the private sector. In August this year, the new Prime Minister Theresa May echoed these sentiments, stating: “From dynamic start-ups to established family firms, our small and medium sized businesses are the backbone of our country.” The resounding confidence in British business as a primary driving force in navigating an entirely new economic landscape outside of the single market is reassuring. Moreover, recognition from front-bench politicians leading the charge in the coming months and years as we establish our business profile as an independent entity is of critical importance.

Recognising High Growth Regions and Sectors

As insightful as political rhetoric may be, policymakers must act now to ensure small businesses are supported by a corporate agenda that bolsters the length and breadth of the UK’s private sector. As well as continuing with important infrastructure projects – such as the Northern Powerhouse – the new-look Conservative Government is tasked with a tall commercial brief. A primary item on the agenda is the continued support of the nation’s high-growth sectors, with 77% of UK GVA accounted for by the services sector, and ONS Chief Economist Joe Grice stating this year that economic growth is heavily reliant on the UK’s dominant service industries. To that end, IW Capital’s proposition is heavily weighted on a finite understanding of the UK’s most resilient, fast-paced sectors. This year, we launched the SME Heatmap, a motion infographic that highlights and dissects the sectors and regions that are driving private sector growth in Britain, with industry champions including fintech, the sharing economy, digital, construction and manufacturing.

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To ensure the continued success of these rapidly-growing sectors, and to boost the long-term prospects of Britain’s private sector, it is crucial that fluid lines of accessibility connect businesses with much-needed development capital. Ultimately, only with a more robust infrastructure for alternative finance – one boasting significant private investor backing and a range of options to suit businesses in all stages of development – will entrepreneurs across the nation be truly supported to progress their ventures. Achieving this will ensure private sector businesses – ranging from early-stage start-ups, to established mid-sized companies and multinational corporations – are fully supported in their contribution to what we know is a global benchmark private sector.

SME Support Must Grow Beyond the Start-Up Revolution

There are currently 1.9 million more small businesses operating in the UK than there were in 2000, a trend driven significantly by a huge influx of start-ups, with over 608,000 new businesses launched in 2015 alone. Coined as the start-up revolution, this generation of business boomers has attracted the interests of many investors over recent years. However, five years on, 2016 marks a transitional point for an emerging segment of British business, far from its initial label of “start-up”. Serviced in their infancy by a range of crowdfunding and P2P lending platforms, this relatively forgotten community of scaling businesses has huge potential waiting to be unlocked. Sherry Coutu, angel investor and founder of the Scale Up Institute, estimated that the UK’s scale-up businesses could be worth 150,000 jobs and an extra £225 billion in GVA by 2034. Naturally, this growth trajectory demands greater employee resource, bigger real-estate, international expansion and technological development, all factors that require a much higher degree of finance than has traditionally been made available through modes of social lending. Sitting in an awkward limbo-stage between crowd-sourced finance and institutional lending, more than half of new businesses in Britain fail to survive beyond five years, with a lack of funding cited as one of the main reasons as to why. For IW Capital, we consider the UK’s “scale-up” community and subsequently the £1 billion funding gap they face, a core business priority.

In April 2016, IW Capital and its sister company Crowdfinders launched Race to Scale, a £100 million funding drive, partnered with leading alternative finance firms Seedrs, Crowdcube, SyndicateRoom and the UKBAA, amongst other leading industry partners. Catering solely to the UK’s scale-up community, the initiative has already secured funding for Manchester-based cancer treatment company Incanthera, with several other companies across the nation given the opportunity to pitch live to serious investors for critical growth finance. Beyond Race to Scale, the private equity industry and alternative finance markets, many other funding initiatives for Britain’s rising population of scale-up enterprises are needed. Whether driven by the private sector or in partnership with policy-led initiatives, a greater selection of accessible funding options is of critical importance to ensure Britain’s small businesses do not just survive, but more importantly, thrive and transform within their respective industries.

Confidence is Key for Private Sector Progression

As we move forward through the Brexit process and the nation establishes its new profile as an independent entity, understanding the sentiments of the UK’s private investor community is crucial in gauging a future-outlook of economic progression. In the month following the EU referendum, the Lloyds Bank Investor Sentiment Index displayed some concerning – albeit expected – early indicators regarding how Britain’s investor community was responding to Brexit. According to the ongoing study, investor confidence towards property dropped by 35.36 percentage points between June and July 2016, while perceptions in relation to UK shares (-21.75%) and government bonds (-15.58%) also fell sharply in this period. By mid-July 2016, the Index had hit its lowest level since its launch in March 2013. Simultaneously, overall consumer confidence also fell as a result of market uncertainty, a shift that can often lead to reduced spending and subsequent economic stagnation if not tackled swiftly.

IW Capital’s commitment to the UK’s entrepreneurial community is equally aligned with our dedication to understanding investor interest, both within our private network and on a national scale. To that end, it is of paramount importance that we obtain timely, in-depth insights – both quantitative and qualitative – regarding the confidence and financial strategies of private investors in relation to SMEs. The research enables us to gauge the future-facing health of private sector development in line with private investment, and moreover, the action that is required to mitigate concerns and increase awareness amongst our community of investors. This research becomes increasingly pertinent in times of political and economic significance, with particular focus in 2016 on the impact of Brexit on both UK businesses and investors. In July this year, to examine what the result of the EU referendum would mean for SME investment in the UK, IW Capital commissioned an independent survey of 2,000 UK adults and investors. The results were published in our latest report – Understanding Investor Sentiment in the Wake of Brexit. The report was featured in 20 different publications, including Forbes, City A.M. and FT Adviser. The timely research found that 52% of British investors would consider supporting the nation’s SMEs through private investment channels in the current climate. Furthermore, when looking to the UK’s future generation of enterprise investors, the study revealed a positive outlook, highlighting an even greater level of support amongst UK millennials, with an astounding 70% aged between 18 and 34 willing to invest in SMEs in a post Brexit climate.

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With investor support holding strong in the wake of Brexit, research by the Business Growth Fund uncovered that 74% of UK SMEs still believe that Britain is a great place to start and grow a business, with 47% of SMEs seeking growth finance. The combined body of data paints a promising picture for the future growth potential of the UK’s SME community, with the majority of investors not deterred by post-Brexit uncertainty in their confidence to back small businesses.

The Enterprise Investment Scheme (EIS) remains a pivotal government-backed initiative that encourages private investment into UK SMEs. Since EIS was launched in 1994, over 24,500 companies have now received investment through the scheme, with more than £14 billion worth of funds raised. Furthermore, the latest figures from HMRC, released in April 2016, demonstrate the growing popularity of the scheme; data for 2014-15 shows that 3,130 companies raised £1.66 billion of funds under EIS, which is up from 2013-14 when 2,795 companies raised a total of £1.56 billion. This tax-incentivised scheme must be protected in the future to ensure its ongoing effectiveness in encouraging private investors to back SMEs. Brexit may help in this respect; no longer needing to adhere to EU legislation surrounding State-aid will mean the UK Government is free to dictate its own policies for EIS.

Celebrating the Success of our Portfolio Companies

At IW Capital it is our utmost priority to support the UK’s most innovative, high-growth SMEs. With a sector agnostic portfolio that encompasses small and medium sized businesses in the sharing economy, fintech, construction and hospitality and leisure, we recognise that one of the great strengths of Britain’s private sector is its diversity. As we reveal in this Summer Newsletter, the companies within our portfolio have each been continuing on their own exciting journeys and we aim to keep on supporting these businesses by connecting them with a private investor network that is confident and informed in its support of Britain’s brightest and best SMEs.

This Summer Newsletter gives IW Capital the chance to highlight the milestone achievements that have defined the last six months for each of our portfolio companies, including plans for future growth, key accolades and notable industry activity. As with every bi-annual newsletter we present our clients, each update is testament to our resounding commitment to the strength of British business, and moreover, the impressive investment potential that a strategic portfolio can deliver.

Luke Davis,CEO, IW Capital

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ALL CHANGE FOR EISThe Finance Act (No 2) 2015 introduced significant changes to the EIS rules which took effect for shares issued on or after 18 November 2015. Most of the rule changes emanate from the EU as part of their continued review of EIS and the other venture capital schemes as part of the State-aid provisions. The medium to long term implications of Brexit on the venture capital schemes is an interesting point, as it is likely the UK will be able to tailor the schemes itself rather than having to be directed by the EU.

One significant change for the investor is the introduction of the “independence” test. An individual will not be able to claim EIS income tax relief on an investment if they already hold shares in the company at the time of the relevant investment unless:

³ EIS, SEIS or SITR (Social Investment Tax Relief) has been claimed on all other shares held by that individual in the company, or;

³ The other shares held by that individual in the company were subscriber shares on the incorporation of the company or were acquired when a pre-formed dormant company was bought “off the shelf” (under the latter typically from a company formation agent) at a time when the company had not begun to prepare for trading

This is a significant development. If, for some reason, SEIS or EIS relief was not available to an investor on a previous share issue (e.g. because the shares were purchased from an existing shareholder rather than being newly issued shares, or the consideration given for the shares was not paid in cash), then EIS income tax relief would not be available on any subsequent share issues to that individual. Careful planning will be required in order to avoid breaching this new rule.

There are also significant changes for the investee company. In summary, the main provisions are:

³ The total amount of “risk finance investments” a company may receive in its lifetime is limited to £12 million, or £20 million for “knowledge–intensive companies”. “Risk finance investments” comprise EIS/SEIS/SITR/VCT investments and some government grants

³ EIS monies must be used for the growth and development of the company (or group as appropriate)

³ EIS monies can no longer be used to buy the trade and assets of another company or business (the disallowance for using EIS monies to acquire the shares in a target company has been in force since 2012)

³ A company must receive its first EIS investment no later than seven years after its (or a group company’s) first commercial sale (ten years for knowledge-intensive companies), unless certain conditions are satisfied

It is the last of these changes that warrants further explanation. The rationale for the restriction is that EIS should be available to investors in younger companies where the “equity gap” is deemed to be more relevant, compared to more established companies that should have a track record and be in a better position to raise equity capital.

The detailed exceptions to the new seven year/ten year rule are as follows. The new rule will not apply if any of the following conditions are met:

³ There was a previous “risk finance investment” in the company during the seven (or ten) year period from the first commercial sale and that previous investment was used for the same activities as the current EIS investment is to be used for. This is the so-called “grandfathering” provision

GUEST COLUMN: ADRIAN WALTON, PARTNER, SMITH & WILLIAMSON

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³ The proposed EIS investment is at least 50% of the average turnover of the company (or group as appropriate) for the last five years and all of the EIS monies will be used for the purpose of “entering a new product or geographical market” (the average turnover test)

³ The company has had previous EIS investment which satisfied the average turnover test and at least some of the monies raised from the proposed EIS investment will be used for the same activities

It is the second of these exceptions which is causing particular problems. Whilst the calculation of average turnover is straightforward, in relation to the secondary part of the test, i.e. what determines “entering a new product or geographical market” is subjective and open to different interpretations. HMRC has very recently published its draft guidance on its interpretation of this new rule and the other recent changes in its internal manuals, but the examples they set out are not particularly helpful as most are clear cut and don’t address the grey areas. HMRC asked for comments on this draft guidance by 31 August 2016 as part of a consultation process.

Recent experience has shown that Inspectors considering EIS advance assurance applications, where this point is relevant, are referring matters to HMRC Head Office for an opinion, which is leading to inevitable delays. Replies to such applications are taking eight weeks in some cases, which is not good for the industry.

One recent case where we obtained EIS advance assurance from HMRC involved a software company which was more than ten years old. The initial business carried on for a couple of years was software consultancy and the first commercial sale was more than seven years ago, hence the company was within the new rules. The fact that the company had been dormant for the last eight years and that the new business requiring funding was the development and sale of specific software applications as opposed to the previous consultancy business, i.e., it was a different business, did not exclude the company from the new rules. HMRC granted the assurance on the grounds that the new products being developed did represent “entering a new product market”, but this was only achieved after several rounds of correspondence.

The overriding message is that the new rules are complex and it is easy to trip up if professional advice is not taken.

Adrian WaltonSmith & Williamson LLPJuly 2016

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ARTEMIS FILMS LTD

The beginning of 2016 has been exceptionally busy for Artemis Films, with a number of the company’s most anticipated projects taking significant steps forward. A script by award-winning writer Paula Milne, Let Me Count the Ways, has seen particular success over the past six months, with leading financiers Headgear confirming full backing of £8 million for the project. Well-renowned director Justin Chadwick has also agreed to come on board, and production of the film is expected to commence in the autumn.

It’s Only Rock and Roll is another exciting project currently in development. Based on the tumultuous relationship between Marianne Faithfull and Mick Jagger, the film is expected to begin production in spring 2017. For the duration of the project Artemis Films will work alongside Leo Pearlman of production company Fulwell 73 – Leo is currently drawing on his long-standing history with band One Direction to secure Harry Styles in the leading role.

One of Artemis’s other exciting projects that has been developing throughout 2016 is the new documentary film Ferrari – Race to Immortality. The picture, which is regarded by the company as warm up act for its Ferrari feature film with Antoine Fuqua, has secured financing and will commence filming this coming summer.

Any Other Day is also set to produce some interest for Artemis, which is in discussion with producers from Studio Canal ahead of the project’s development. Based on the life of Paralympian Martine Wright, who lost her legs in the 7/7 bombings, Any Other Day follows her story from the day of the attack to her inspiring experience at the Paralympic Games.

MEDIA COvERAGE

‘Embankment and Kevin Loader team for Ferrari racing documentary’ – Screen Daily, May 2016Screen Daily reports on the production of new Ferrari racing documentary, Ferrari – Race to Immortality.

‘WA Screen Awards winners announced’ – If, July 2016This article covers the results of the WA Screen Awards, including documentary producer Brian Beaton of Artemis Films scooping the prize in the WA Screen Academy Best Long Form category.

COMPANY HIGHLIGHTS

³ Artemis has raised £8 million to fully fund Let Me Count The Ways, with Justin Chadwick confirmedas the film’s director

³ The company is in discussions to cast One Direction star Harry Styles as Mick Jagger in It’s Only Rock and Roll

³ Artemis is set to create a film about inspiring Paralympian Martine Wright

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BILLIAN

During the first six months following its launch, Billian has been focused on developing and selling products into the utility sector. During this time, the company achieved vital CE approval and was awarded both the National Joint Utilities Group award for Innovation and the award for Excellence in Street Works at the Utility Week Awards.

Building on the back of this success, Billian has spent the first half of 2016 extending its fleet to include 12 Roadmender machines, for which sales are steadily growing as more companies within the utility reinstatement industry begin to adopt the technology.

During March 2016, Billian began selling Roadmenders for pothole filling, and customer feedback has suggested this could be a particularly lucrative market for the company to expand into further. Additionally, Billian has commenced development of a patented recycling process that produces asphalt for less than half the regular price, which could potentially revolutionise both the pot-hole patching and utility reinstatement industry. Among its other benefits, this process is highly sustainable, and will allow councils to reuse both aggregate and bitumen to turn waste into a valuable asset.

Following its initial development, the process is now being trialled with a major contractor based in Suffolk. If successful, the introduction of this process to the market could begin as early as September and mark a revolutionary new chapter in the company’s history.

COMPANY HIGHLIGHTS

³ Billian has extended its fleet of Roadmenders to 12 machines

³ The company began development of a patented recycling process that produces asphalt for less than half the regular price

³ Billian commenced a trial of the recycling process with a major contractor

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BORROWMYDOGGY

BorrowMyDoggy (BMD) was founded in 2012 by CEO Rikke Rosenlund. The company, which matches dog owners with dog borrowers, has seen its member base grow impressively over the past four years – today BMD boasts more than 400,000 members, which represents an increase of 100,000 in the past six months.

So far the business has received in excess of £1.6 million through its subscription model. Over the past four years it has also developed a significant public profile, with around 200,000 followers across its social media platforms and regular national media coverage. Its position as one of the leading names in Britain’s sharing economy is particularly important given the fact that PwC has estimated that this sector could contribute as much as £140 billion to the UK economy by 2025.

The company’s success within the fast-growing sharing economy was recognised at this year’s Europas Awards, which were held in London. BMD was shortlisted for Best Sharing Economy Start-up at the event in June, while Rikke Rosenlund was named among the nominees for the prestigious Best CEO award.

Looking forward, BMD has begun working alongside the RSPCA – the UK’s leading animal welfare charity – and it intends to continue strengthening this relationship in the future. Furthermore, the company is currently investing in marketing in order to grow its member base of dog-lovers as well as focusing on making improvements to the platform as a means of improving conversion rates and customer retention.

MEDIA COvERAGE

‘Meet the Londoners making friends through online apps’ – Evening Standard, April 2016This video and article by the Evening Standard examines how apps are helping to bring people in London together, including the dog borrowing platform BorrowMyDoggy.

‘Something borrowed: The booming sharing economy means you may never have to buy again’ – The Independent, June 2016This feature by The Independent focuses on how a host of companies are getting in on the peer-to-peer and sharing trend, including BorrowMyDoggy.

‘Q&A: Rikke Rosenlund of BorrowMyDoggy’ – Tech City News, August 2016Rikke Rosenlund speaks to Tech City News about where the idea for BorrowMyDoggy came from, the most challenging parts in running the company and how mentors have helped her to get where she is.

COMPANY HIGHLIGHTS

³ BMD was shortlisted for Best Sharing Economy Start-up and Rikke Rosenlund for Best CEO at the prestigious Europas Awards

³ The company has received £1.6 million through subscription revenues since the business was founded as it has added 100,000 members since January 2016, taking the total to 400,000

³ BMD started working alongside RSPCA – the UK’s leading animal welfare charity

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BREWHOUSE AND kITCHEN

Following a year of exceptional growth and investment in 2015, Brewhouse & Kitchen has continued to go from strength to strength this year. The company has opened five outstanding new pubs across London, the South and the West of England as well as acquiring more fantastic venues and establishing a new franchise model.

At present, the company has 12 operational pubs under the Brewhouse & Kitchen brand, with a further five owned and franchised pubs to open by autumn this year. By the end of 2016, the company aims to have ten owned operational pubs and a further seven franchised premises.

Brewhouse & Kitchen is now the largest Brewpub brand in the UK pub retail market. In addition to the company’s rapid expansion in the last 12 months, Brewhouse & Kitchen has also grown its support structure by developing its marketing team. The company has appointed a new Head of Marketing, Matt Preisinger – previously of All Star Lanes. Matt has brought a specific focus on developing the company’s unique brand.

The company has also appointed Hayley Connor – previously at The Restaurant Group – who has joined as the new Head of People and Learning. In addition to transforming the Brewhouse & Kitchen HR function, she has also brought energy and enthusiasm to the company’s team and its new openings.

Although the Gross Asset Ceiling on EIS was reduced following the Finance Act last year, the quality and strength of the company enabled it to raise a further £2.5 million of non-EIS-backed funding. Coupled with an additional loan facility made available to the company by its bank, the company is now well positioned to complete its acquisition and development programme this year.

MEDIA COvERAGE

‘A photo booth that dispenses beer is coming to London’ – Evening Standard, July 2016The Evening Standard reports on a new beer dispensing photo booth that is coming to London and can be found in Brewhouse & Kitchen pubs.

‘Beer dispensing photo booth to appear in London’ – The Drinks Business, July 2016Brewhouse & Kitchen appears in The Drinks Business as its pubs are to host a new beer dispensing photo booth.

‘7 brilliant breweries whose beers you need to start drinking immediately’ – Gloucestershire Live, August 2016Gloucestershire Live references Brewhouse & Kitchen as it runs down seven brilliant beers.

COMPANY HIGHLIGHTS

³ Brewhouse & Kitchen opened five outstanding new pubs in London, the South and the West of England

³ In addition to acquiring further new venues, the company also established a new franchise model

³ The company currently has 12 operational pubs under the brand, with plans to open a further five franchised pubs by autumn

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CONCRETE PANEL AND BLOCk COMPANY

The first half of 2016 has been exciting for Concrete Panel & Block, as a recent management buy-in (MBI) and a boost in investment has triggered a positive response from both the company’s customers and suppliers alike.

As part of the company’s business plan, Concrete Panel & Block is working towards reduced reliance on the agricultural sector and is instead placing a greater focus on the storage and waste management industries. Doing so will lessen the impact of weather on the brand’s success, giving it broader and more robust foundations for future growth.

So far, the company’s new focus has helped it secure two new shed building clients, resulting in double the number of core repeat business and underpinning around 50% of the firm’s monthly activity. Furthermore, Concrete Panel & Blocks has developed corporate sales, resulting in the securing of new block supply contracts with major national aggregate and recycling customers, which are considered point of entry into these sectors and an ideal opportunity for development.

In order to increase sales to major corporate customers, the company has also passed its first BSI accredited CE audit and is planning to take on a distributor role for an Irish company for sizes of panels not manufactured by the company. This move away from purely in-house sales is expected to boost future business prospects and help the firm take advantage of new market opportunities.

COMPANY HIGHLIGHTS

³ Concrete Panel & Block has secured two new shed building clients, doubling the company’s core repeat business

³ The company secured block supply contracts with major companies

³ Concrete Panel & Block passed its first BSI accredited CE audit

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DERBY STREET FILMS

Throughout 2016, Derby Street Films has been making significant progress with the production of a number of exciting projects. Most notably, Booze Buddies is now receiving a rewrite ahead of signing a deal with Adam Sandler’s production team. A recent multi-picture deal signed between Sandler and Netflix has also been a source of excitement, and could possibly provide a satisfactory exit for the film.

Just My Imagination is also a receiving a great amount of interest from outside parties, and is currently being considered for two separate production paths. If Derby Street Films is able to work alongside Cross Creek and secure a Sony producer slot, the company states that it is possible the film will gain a new director and begin production in the near future. Alternatively, it may be distributed with A24 and go into production in 2017 with a budget of $5 million.

Three further films are also in development and production stages with Derby Street Films, including Parental Consent, Second Born and Tiger’s Curse. Although production times will vary, the company believes they are all likely to exit within the next 12 months, with Parental Consent ready to commence filming by Q3 of 2016 following the appointment of Michael Gallagher as director for the project. Second Born is also likely to be filmed by the end of 2016 – the script is currently being refined by new writer Nathan Alexander.

COMPANY HIGHLIGHTS

³ Derby Street Films is hoping to secure a deal with Adam Sandler and Netflix for current project Booze Buddies

³ Just My Imagination is expected to go into production in 2017 with a minimum budget of $5 million

³ The company has five films that it expects to exit within the next 12 months

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GINx

Ginx has provided the following statement for the IW Capital Summer Newsletter 2016: “Ginx is currently involved in negotiations regarding a significant investment in the company. Whilst we can’t comment further at this stage all shareholders will be contacted in the coming weeks regarding the structure of this deal as well as receiving a performance update.”

Ginx has enjoyed a busy and successful 2016 thus far. The company rebranded to Ginx eSports TV prior to the launch of its new TV channel on Sky. The first of its kind, the channel provides 24-hour coverage of the world of competitive computer gaming, which is rapidly gaining mainstream popularity thanks to its large prize pots and increasing exposure.

The channel was previously only available on Virgin Media’s TV platform, but it has now launched as part of Sky’s electronic programme guide on channel number 470. It airs a variety of tournaments including Turner’s ELEAGUE, which includes coverage of the world’s biggest competitive game Counter Strike: Global Offensive. Furthermore, live broadcasts will be made regularly from Ginx’s studio in Kings Cross, London.

Ginx eSports TV has also been partnered with ITV, which has given Ginx a total reach of 37 million households around the world, with 23 million of these being located outside the UK. It makes Ginx eSports TV the biggest gaming channel on the planet.

MEDIA COvERAGE

‘The UK is getting its first 24-hour eSports TV channel’ – Wired, June 2016This article reports on the launch of the UK’s first eDports channel, broadcasting competitive video gaming, in June this year.

‘GINX eSports TV Set for launch’ – Sky Sports, June 2016Sky Sports announces the launch of a new eSports channel – GINX eSports TV – on channel 470.

‘Sky to air UK’s first 24-hours eSports TV channel’ – The Guardian, June 2016The Guardian covers the news that Sky is soon to be launching its first 24-hour TV channel that will focus solely on eSports and competitive gaming.

COMPANY HIGHLIGHTS

³ Ginx has rebranded to Ginx eSports TV ahead of the launch of its new TV channel

³ Ginx eSports TV is set to provide 24-hour computer gaming coverage in partnership with Sky

³ The company has also partnered with ITV, helping grow the channel’s outreach to 37 million households around the world

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GLOBAvISTA

Despite very challenging trading conditions across both the maritime shipping and oil and gas exploration industries, Globavista has continued to develop its business and product offering in 2016. This business development process has already produced industry-leading software products that are now marketed and delivered via the internet to reduce business costs and increase engagement with online customers (a ‘software as a service’ offering).

Globavista’s enhanced focus on software for the maritime market is being channelled through a rebranded portal known as BigOceanData. This provides a “one-stop-shop” for commercial fleet managers, combining all relevant services to increase efficiency for business owners and charterers. The product was launched in February 2016 and a number of new business customers and prospects have been built within the last six months, including two of the world’s largest shipping companies, signalling a successful start to this product launch for the company.

Globavista has also spent the past six months progressing the redevelopment of the company’s TracsTDMA hardware device, which provides oil and gas exploration businesses with precise positioning information. Now nearing completion, the redevelopment has already drawn the attention of many major companies, with one committed to buying the revised version for the next seven years. Always keeping an eye to the future, Globavista is also planning to develop a light version of the technology to allow sales into network applications for more remote regions, where other forms of communications are poor.

MEDIA COvERAGE

‘BigOceanData launches next-generation vessel tracking system for professional market’ – American Journal of Transportation, February 2016The American Journal of Transportation reports on the launch of BigOceanData – Globavista’s next-generation vessel tracking system for the professional market.

COMPANY HIGHLIGHTS

³ Globavista began the delivery of industry-leading software products to the maritime market (SaaS) through its new BigOceanData portal

³ The company is redeveloping TracsTDMA hardware to engage new clients requiring precise positioning information

³ The business has already secured a seven-year hardware contract with one customer for the new TracsTDMA

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HALCYON HOTELS AND RESORTS

Based in the UK, Halcyon Hotels and Resorts plc acquires, develops, owns, and operates hotels. The company was formerly known as Acraman (Halcyon) plc and changed its name to Halcyon Hotels and Resorts in November 2010 – it was incorporated in the same year.

Last year proved to be a defining 12 months for the company – acquiring and renovating The Polurrian Bay Hotel in Cornwall to make it one of the region’s leading luxury hotels. Following an excellent period of trading in 2015, The Polurrian has continued to be a popular destination amongst tourists visiting the region, receiving many positive reviews in the press. April proved to be a particularly busy period for the hotel, although the cold and wet weather did hurt trading levels in May and June.

The British Summer has proven to be a fruitful time for Halcyon Hotels and Reports. Britain’s decision to leave the European Union on 23 June has had a positive impact on domestic tourism and hospitality industries, particularly in the south of England. As a result of a weaker pound, it is estimated that as many as 2.5 million Britons have decided to holiday at home this summer. This is complemented by an increasing number of foreign tourists visiting popular regional British towns such as Cornwall.

One area of disappointment for the company has been a further delay to the planning process for the villa development at The Polurrian. As reported last year, the company’s plan is to sell the six villas on a ‘sale and leaseback’ basis, and to offer its shareholders priority access to these properties. This project is potentially very valuable, both for the development surplus it will yield, and also for the extra high quality hotel inventory it will deliver.

The company has now been going for five years and so, along with their business partners in Luxury Family Hotels, Halcyon is now actively pursuing exit opportunities for shareholders.

MEDIA COvERAGE

‘Five of Britain’s best-kept secret beaches’ – MoneyWeek, July 2016Near Kynance Cove, Cornwall – one of Britain’s best-kept secret beaches – lies Polurrian Bay Hotel is spectacularly located and has a great pool terrace. MoneyWeek reviews it in this article.

‘Cornwall of fame - we explore the UK’s best-known coastal town’ – Irish Mirror, July 2016The Irish Mirror reviews the Polurrian Bay Hotel in Cornwall, which boasts 12 acres of landscaped gardens and south-facing views across the Atlantic Ocean and Mounts Bay.

COMPANY HIGHLIGHTS

³ Halcyon Hotels and Resorts enjoyed a strong trading period in April and across the Summer months

³ The spike in domestic tourism following Britain’s decision to leave the European Union has delivered strong trading results for Halcyon Hotels and Resorts

³ Despite some delays, the planning process for the villa development at The Polurrian Bay Hotel in Cornwall continues

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HIGHGATE TECH FUND

In 2016 so far, Highgate Tech Fund has continued to support each of its three companies in developing their respective products. Over the past six months, changing market conditions have presented some opportunities and challenges for these companies which Highgate Tech Fund will continue to address throughout the year.

Ecometrica is a sustainability software company providing services that encompass all elements of environmental and sustainability accounting as well as geospatial information management. This business has continued to grow rapidly in 2016, making good headway in the US and acquiring some leading blue chip clients. Having received another Innovate UK Award for supporting R&D worth £125,000, Ecometrica’s technical team is also being expanded to support a contract recently won from the UK Department of International Development.

Highgate Tech Fund’s other two companies – HG Apps and Doing Something – have been adjusting to changing market conditions in their respective industries. Doing Something is an online dating service that offers their users a platform to organise activity-based dates. The company is still in the process of establishing its presence within a competitive market.

HG Apps, a creative software and application development company, is also finding it difficult to establish itself within a market that is becoming saturated with new apps and start-ups. This proliferation of apps, combined with the new economics of selling apps, has reduced the ability for HG Apps to raise funds and find new investors. Their management team hired a business broker in 2015 and they will be attempting to sell the company and its assets in 2016 as a short-term strategy.

Highgate Tech Fund’s performance in 2016 so far has been positive overall. There has been some pleasing progress with Ecometrica and while there are sometime short-term challenges for HG Apps and Doing Something, the company will continue to provide them with the support they require to achieve their goals.

MEDIA COvERAGE

‘Space data outfit Ecometrica broadens horizons’ – The Scotsman, May 2016The Scotsman reports on the progress of Highgate portfolio company Ecometrica, which is planning to recruit additional staff thanks to the £622,000 injection from Clydesdale Bank.

COMPANY HIGHLIGHTS

³ Highgate Tech Fund’s portfolio company Ecometrica was awarded an Innovate UK Award for supporting R&D worth £125,000

³ Ecometrica will be expanding its R&D technical team to support a contract recently won from UK Department of International Development

³ Highgate Tech Fund’s portfolio company Doing Something has continued to strive as an early-stage business

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INCANTHERA

Revolutionary oncology drug developer Incanthera has enjoyed a successful start to 2016, which included the company securing pledged finance off the back of pitching at an event in London. Incanthera pitched live to an audience of around 400 investors at Crowdfinders Live in April, resulting in £150,000 being raised in pledged finance.

Originally a spin-out from the University of Bradford’s Institute of Cancer Therapeutics, Incanthera now operates from Manchester and has research facilities in Bradford and Salford. The innovative company exists to bridge the funding gap that often inhibits ground-breaking research from translating into a commercially viable product and progressing into a cure for serious diseases.

Aided by the pledged finance, in the immediate future the company will continue with its core proposition, which is to progress drug programmes through to early human clinical trials, obtain vital safety and efficiency data, and to then commercialise the product through licensing deals with major pharmaceutical companies.

Incanthera is also currently working on a breakthrough new cancer drug that has been dubbed the “smart bomb”. The drug enables colchicine, which kills tumours by starving them of blood, to work without causing side effects in patients. Trials are due to be carried out by Professor Christopher Twelves of St James’s University Hospital in Leeds, with the first phase of testing expected to conclude in 2018.

MEDIA COvERAGE

‘City news: Incanthera, HMRC penalty and My Local’ – Sunday Express, June 2016The Sunday Express reports on the latest funding raise for Incanthera and the company’s plans to develop the “smart bomb”

‘Never mind start-ups, it’s scale-ups that urgently need funding’ – Guardian, June 2016The feature focuses on the need for greater funding to scale-up business in Britain and includes coverage of the funding secured by Incathera

‘£150,000 boost for drug development firm Incanthera’ – Manchester Evening News, June 2016The Manchester Evening News writes about how local cancer treatment company Incanthera has secured a money through a new round of investment

COMPANY HIGHLIGHTS

³ Incanthera secured £150,000 in pledged finance after pitching live to a room full of investors at Crowdfinders Live

³ The company is currently working on developing a new cancer drug dubbed the “smart bomb”

³ The phase one of the “smart bomb” is due to completed at Leeds’ St James’s University Hospital in 2018

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MAYFAIR BRANDS

Mayfair Brands Ltd has made significant advances in the past six months after it was successfully able to introduce its award-winning premium Mayfair London Dry Gin into two new markets. Added to the brand’s already extensive list of worldwide distributors are Denmark and the Canadian Province of Quebec, which are both key markets in the next stage of Mayfair’s growth strategy.

Mayfair was selected from a wide range of competitors by Société des Alcools du Québec, thereby enabling it to distribute its premium gin across the Canadian Province. This development was particularly advantageous for the brand, marking a significant step in the company’s goal of securing a solid foundation in the sizeable Canadian market. Similarly, distribution within Denmark via the highly respected MAC Y company will provide Mayfair with an opportunity to grow its presence across Scandinavia in the coming years.

As well as its entering these two new markets, the company has also seen significant success in its current distributor base, both within Europe and across the US. Specifically, Mayfair’s distribution network across 12 European countries has increased purchases by 70% in just one year. This success has confirmed the brand’s growing reputation and increasingly loyal customer base.

COMPANY HIGHLIGHTS

³ Mayfair Brands has secured inaugural distribution in Canada through selection by Société des Alcools du Québec

³ Mayfair Brands also entered the Scandinavian market after securing distribution with the MAC Y company in Denmark

³ Purchases within Europe have increased by 70% within the last 12 months

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METROPOLIS DIGITAL MEDIA

In the past six months, Metropolis Digital Media (MDM) Limited has worked hard to increase the company’s spread of advertising platforms – the company now boasts 100 taxi media pods, or 200 screens, deployed around London. These screens are already generating advertising revenues and boosting interest from advertising agency customers as well as other specialists.

On the back of this success, the company now plans to take advantage of a window of opportunity and scale up the business by deploying a further 500 media pods within the next 12 months, which will give MDM a total inventory of 1,200 screens. This growth will primarily be targeted towards the London market, but will also cover the rest of the UK and a number of additional countries.

As a leading player within the London media industry, MDM is already receiving enquiries from around the world, including companies from the US, Middle East, Netherlands and South Africa. A particularly notable enquiry came from the largest taxi company in Baku, Azerbaijan, which is considering the use of taxi media pods for its fleet of 1,500 vehicles. Additionally, through strong partnerships with London taxi firm J&B, the company is now exploring an opportunity with their partners, who have a strong presence in New York.

This interest from overseas has prompted the MDM team to prepare to design and develop a new media pod for the transcontinental and US market, which will introduce larger screens to take advantage of the reduction in physical height limitation issues in many international taxis.

COMPANY HIGHLIGHTS

³ MDM has increased deployment to 100 taxi media pods, or 200 screens, across London

³ The company plans to deploy 500 further taxi media pods by July 2017

³ MDM has commenced preparations for the development of screens designed for transcontinental and US markets

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MONEY&CO.

This company update has been written by Nicola Horlick, CEO and Co-founder of Money&Co.

Money&Co. has seen several significant developments across the first half of 2016. The most notable of them was that the company signed an agreement to receive investment capital from the Chinese Overseas Consortium Development Company. This would be the firm’s third funding round and is valued at more than £20 million. The P2P lending platform is still awaiting completion of this investment but in the interim it has secured a bridging loan until the funds arrive.

While this investment is being concluded, Money&Co. has continued to establish itself in the fintech and P2P lending space. Since it offered its first loan in June 2014, the company has now lent £7.2 million. Furthermore, at present 25.2% of the loans made through the platform have been repaid by the borrowers. As of July 2016, the average loan size listed through Money&Co. stood at £311,000 and the average gross interest rate has been 9.15%.

Looking to the future, the lending platform has developed a strong pipeline of new loans and is now striving to significantly increase the pace of loan origination over the coming months. In order to ensure it can originate loans quicker, Money&Co. is actively pursuing options to increase the amount of money it has available to lend – this includes talking to a number of family offices, as well as engaging with some smaller banks with a view to putting in place agency agreements. The company is also examining ways of raising money from retail investors through the issuance of a listed bond.

MEDIA COvERAGE

‘Nicola Horlick’s P2P Lender Money&Co. Receives Chinese Investment’ – Crowdfund Insider, July 2016Money&Co.’s CEO Nicola Horlick reveals that the company is due to receive Chinese investment in the near future.

COMPANY HIGHLIGHTS

³ The total value of loans lent through Money&Co. since its first loan in June 2014 is £7.2 million

³ To date, 25.2% of the loans made through the lending platform have been repaid by the borrowers

³ Money&Co. is currently exploring various options to increase the amount of money it has to lend and thereby significantly improve the pace of loan origination

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PINk LINING

Since the start of 2016, Pink Lining has entered into late-stage negotiations with two large European distributors. One of these distributors has previously worked with one of Pink Lining’s major competitors – a £50 million a year business – while the other has large manufacturing capabilities in China. The company is also in early discussions with potential license partners to help extend the fashion brand.

Major American clothing brand Anthropologie has begun to stock some Pink Lining gift items from the Kids collection and early sales have been very encouraging. The company is also continuing talks with Target through a US agent who felt that a range that Pink Lining was working on, and is due to present soon, was more suitable for them than the main line collection.

In the UK, the company has been approached by Next Directory and House of Fraser to discuss the possibility of pursuing web only or direct to consumer initiatives. Pink Lining also launched online with Shop Direct and initial performance has been very strong, with sales forecasts of £100,000 for the coming year.

Although Pink Lining recently parted company with its sales manager and their deputy, the company has acquired a new production manager for maternity cover whose experience with larger businesses has proven to be a major benefit to the company.

Despite challenges and considerable pressure earlier in the year, which saw sales reverse for the first time and its warehouse stock compromised by factors beyond the company’s control, Pink Lining is optimistic for the future. As per the Winter Newsletter update, Pink Lining has once again fared well in the recent awards season and has also been shortlisted in the Little London Awards and the Mummi Awards.

COMPANY HIGHLIGHTS

³ Pink Lining has entered into late stage negotiations with two large European distributors

³ Major US clothing brand Anthropologie has begun to stock some Pink Lining gift items and initial sales have been very encouraging

³ The company fared well in the latest awards season and is shortlisted for the Little London Awards and the Mummi Awards

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SqUARE PIE

The first half of 2016 was extremely positive for Square Pie, with total sales up 30% on 2015’s figures and the business on track to turn over in excess of £4.3 million by the end of the year. This success is due in part to Square Pie’s consistent focus on broadening its food offering, which now includes salads, gluten free pies and quality jacket potatoes.

Despite the increasing number of challenges posed by competition for customers and sites, Square Pie is enjoying the benefits of having embraced online delivery services, such as Deliveroo, City Pantry and Uber-Eats. The company has also benefitted from its decision two years ago to develop its grocery and wholesale business, which has provided a dual income stream and reduces reliance on shopping centre sales.

Within the past six months, the gourmet pie maker has also achieved listings for classic pies in London branches of Tesco and Co-op, nationwide in Sainsbury’s, and online via Ocado and Amazon Fresh. The company’s presence in a number of high profile but low budget marketing campaigns has also proved effective, and at this year’s Glastonbury festival Square Pie was selected as Chris Evans’ favourite food on site during a live Radio 2 broadcast.

MEDIA COvERAGE

‘Square Pie to launch three-strong frozen range into Sainsbury’s’ – The Grocer, March 2016This article from The Grocer reports on the news that gourmet pie maker Square Pie is to introduce a range of frozen products into Sainsbury’s.

‘Square Pie launches EU referendum specials’ – Eat Out Magazine, June 2016An article reporting on how, ahead of the EU referendum, Square Pie introduced a new range of special pies – a Remain and a Leave themed pie – to gauge the opinions of the British voters.

‘Square Pie launches square salads range’ – Eat Out Magazine, July 2016Eat Out Magazine reports on Square Pie’s decision to launch a new range of healthy square salads in collaboration with its new chef partner, ex-Hix and Scott’s Ronnie Murray.

COMPANY HIGHLIGHTS

³ In the first six months of 2016, Square Pie’s total sales were up 30% on 2015’s figures

³ The company has continued to reduce the challenges posed by fierce competition in the industry by embracing online delivery services such as Deliveroo and Uber-Eats

³ Achieved listings in major retailers, including Tesco, Sainsbury’s and Co-op

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UNBOUND

Over the past six months, Unbound’s unique service offer has cemented the company’s position as a leading driver of innovation within the publishing industry. Applying the principles of crowdfunding to the world of book publishing, Unbound has continued to connect would-be authors with an online community of users keen to support new book ideas, be it fact or fiction.

Unbound has been launching an average of 15 books per month since January 2016, while the average amount of pledged revenue raised each day has reached £4,000 – 25% higher than the previous year’s projection. As Unbound continues to upgrade the functionality of its site, the company is anticipating the daily pledged revenue to hit £5,000 prior to the beginning of the new financial year. Part of this improvement was seen in March when the company launched an online submission form for prospective authors. So far, it has received 74 completed submissions with over 295 currently in progress.

Since the beginning of the year, a number of Unbound titles have also received impressive reviews across national papers and magazines, including The Guardian, The Sunday Times, Spectator, Independent and The Times. These books include David Quantick’s The Mule, and Sally Bayley’s The Private Life of the Diary.

With a series of exciting projects in the pipeline for the remainder of the year, 2016 is set to be another year of important company milestones for Unbound. Most importantly, the company will continue to link authors with book-readers within its online crowdfunding community.

MEDIA COvERAGE

‘Crowd-funded memoir wins £3,000 PEN Ackerley prize’ – The Guardian, July 2016Alice Jolly’s crowd-funded memoir, Dead Babies and Seaside Towns, has beaten books by AA Gill and Adam Mars-Jones to win the £3,000 PEN Ackerley prize.

‘How writers are turning over a new leaf as crowdfunding gains ground’ – The National, July 2016A feature article in The National profiles Unbound as a leading crowdfunding publisher that finds a balance between self-published works and traditional publishing houses.

‘Review of ‘Beast’, by Paul Kingsnorth’ – Financial Times, July 2016Rejected by traditional publishing houses, Paul Knightnorth was able to publish his debut novel Wake through crowd-funded publisher Unbound. His follow-up novel Beast, was reviewed by the Financial Times.

COMPANY HIGHLIGHTS

³ Since January 2016, Unbound has been launching an average of 15 books per month

³ Unbound’s average daily pledged revenue has reached £4,000 per day – 25% higher than initial projection rates

³ An online submission form was added to the Unbound website in March, which has led to 74 completed submissions

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WESWAP

WeSwap has enjoyed a very positive six months of high growth, continuing to build its user base and boost its activity. Around 55,000 new users were added in the first half of 2016, taking the total number of people now using the currency exchange platform to 140,000. In the four-month period from March to June, the company’s monthly FX activity increased from £2 million a month to a record £3.8 million in June.

In June 2016, WeSwap completed the first part of its ongoing Series A+ round of funding, with a new £2 million investment secured from Ascot Capital, while a number of institutional investors have also expressed their interest. The company is aiming to secure at least a further £2 million of equity funding in the second half of the year and is also seeking to secure a working capital facility to support the high growth. Securing the additional funding and closing the funding round in a timely manner will be crucial for WeSwap in order to develop the brand and build on its recent success and traction.

In 2016 thus far, WeSwap has demonstrated strong growth, which has been achieved with a below budget marketing spend. WeSwap has generated its own organic momentum and traction amongst users, with a growing number of repeat loads and swaps by its users. Further funding will, however, help to continue this growth and boost marketing and operations.

In June of this year, WeSwap undertook a successful brand refresh, including the launch of a new website and iOS and Android apps. This will promote the brand’s identity as the first ever ‘people’s currency exchange’ with a key message to users to ‘travel happy’ with less stress (and exchange money in the cheapest possible way). The company has also now developed over 20 travel partnerships including National Geographic, Hotels.com, Icelolly and Skyscanner. Many more exciting partnerships are expected to follow in the second half of 2016.

Last year was a year in which WeSwap concentrated on user growth and platform stability. The focus for 2016 and beyond is to rapidly improve the economics of its business model, reducing the cost of acquiring users and building additional revenue streams.

MEDIA COvERAGE

‘Get more foreign currency for your Brexit-hit pounds’ – The Times, August 2016The Times journalist Anna Mikhailova puts WeSwap to the test on her holiday to Spain and reviews the company in this article.

COMPANY HIGHLIGHTS

³ WeSwap has added around 55,000 users in the first half of 2016, taking the company’s user base to 140,000

³ In the period from March to June, the company’s FX activity increased from £2 million a month to £3.8 million a month

³ As of July 2016, WeSwap had raised £2.4 million as part of its ongoing Series A+ fund raising activity

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IW Capital’s portfolio companies have enjoyed some outstanding results in 2016 thus far. Meanwhile, our latest report – Understanding Investor Sentiment in the Wake of Brexit – revealed that the majority of the UK’s private investors have considerable confidence towards small businesses as a viable investment opportunity in the post-Brexit climate, despite a fall in other asset classes. Combined, the performances of the businesses celebrated in this Summer Newsletter and the findings of IW Capital’s recent research provide a noteworthy cause for optimism. It is now of paramount importance that investors are educated and equipped to act on their positive sentiment, ensuring it translates into formative action for Britain’s small businesses. Doing so will bolster the private sector and help drive the long-term growth of the nation’s economy as the UK prepares to part from the EU.

To that end, IW Capital has launched Access 42 – an exclusive community dedicated to the sophisticated investor, helping to inform their investment decisions and educate them on how to act on their investment intentions. Members gain priority access to industry-leading reports, exclusive research on the Enterprise Investment Scheme, and insights on the future of business Britain. Furthermore, Access 42 members will also receive pre-emptive reviews of the latest IW Capital investment opportunities before they are made public, as well as getting discounted VIP tickets to alternative finance conferences and investor networking events.

Get in touch with a member of the IW Capital team today to find out how you can obtain membership to Access 42.

OUTLOOk FOR 2016

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