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EIS Crowd 19 September 2018

  • BY: Andrew Hore |
  • POSTED: 23/10/2018 |

Foreign investment grows
According to research firm Beauhurst, last year foreign investors put more money into UK growth firms than ever before. Investment increased from £3.8bn to £6bn, with more than £1bn of that cash coming from the Silicon Valley area of the US.
More than two-thirds of deals valued at more than £50m had foreign participation. Few deals worth less than £500,000 had a foreign element. All the deals valued at more than £200m had a foreign investor. The average value of thee foreign-backed deals is on an increasing trend.
The sectors most favoured by overseas investors, include blockchain, crypto currencies and open source technology, where more than 50% of deals have foreign investors. Biomass and biofuels is the least favoured sector.
Europe remains a strong source of capital with 22% of the cash going into seed capital, 46% in venture investments and 32% in more mature growth investments.
In the first quarter of 2018, 31% of deals included foreign investors, compared with 16% in the first quarter of 2015.
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Bidstack advertises AIM reversal
Bidstack is the latest crowdfunded company that has gained an AIM quotation. The provider of in-game, targeted advertising for video games has reversed into AIM shell Kin Group, which was previously Fitbug Holdings.
Bidstack raised £137,590 for 12.1% of the company via CrowdCube, which is not surprising considering founder James Draper had been head of commercial at CrowdCube. Bidstack is almost three years old and originally focused on the digital outdoor advertising market before moving into the video games sector. It has raised additional finance since the crowdfunding and was acquired for £6.8m in shares. The shares were issued at 6p each and a placing raised £3.5m, £2.825m net of expenses, at the same price. The enlarged business has cash of £3.69m.
Bidstack had revenues of £10,000 in the 14 months to December 2017. There were no revenues in the following five months. Management is in talks with video games developers and has already launched its service in Football Manager 18. Bidstack has a sales team selling the potential adverts in the game.
Revenues will be modest this year but are forecast to be £5.9m in 2019. Bidstack could become profitable in 2020.
Previous crowdfunded companies that have come to AIM include accounting software provider FreeAgent, which raised £1m at the equivalent of 100p a share through Seedrs. Less than two years after the AIM flotation at 84p a share, RBS acquired FreeAgent for £53m, which is equivalent to 120p a share.
Short-lived residential property investment company Mill Residential REIT raised £2.22m through Syndicate Room at the end of 2014, prior to joining AIM. Mill left AIM one year later because it could not raise the additional funds it required to make acquisitions to add to its portfolio. The company was liquidated and cash returned to shareholders.
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The Enterprise Investment Scheme Association has scheduled a series of regional events covering EIS and Seed EIS, as well as other alternative financing opportunities. Details can be found here.
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In 2016-17, £1.8bn was raised via EIS, which is lower than the previous year. The 2017-18 figure could fall further due to the tightening of the EIS regulations to stop capital preservation-type schemes. During the summer, the European Commission approved the Autumn Budget 2017 changes to EIS and VCT schemes.
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In June, PrimaryBid.com helped mass spectrometry instruments developer Microsaic Systems to raise £102,000 of a total of £5.5m raised at 20p a share. Later in the same month, fully listed oil and gas company Zenith Energy raised nearly £150,000 via PrimaryBid.com at a share price of 4p. 

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