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EIS Crowd 15 November 2019

  • BY: Andrew Hore |
  • POSTED: 18/11/2019 |

Scaleups continue to grow in numbers

The third edition of the Scaleup Index reports that the number of private scaleups have risen by nearly one-quarter to 5,456 and this number swells to more than 5,700 companies when AIM-quoted companies are included. 
The Scaleup Index 2019 is produced by the Scaleup Institute and Beauhurst and covers unquoted and AIM-quoted businesses. There was £1.3bn invested in scaleups during 2018.
The report uses the OECD definition of a scaleup. This states that a scaleup is an enterprise with average annual growth in employees or turnover greater than 20% per annum over a three-year period, and with more than 10 employees at the beginning of the period.
Only UK companies that meet two or more criteria of annual turnover exceeding £10.2m, assets greater than £5.1m and more than 50 employees are included. That is because smaller businesses do not have to disclose turnover to Companies House so they cannot be measured.
The report does not include businesses that are part of an overseas based group or those that are subsidiaries of a group that is itself a scaleup. Fully listed companies are also excluded.
The report shows that those companies that have grant funding tend to raise more funding from investors.
There were 249 unique AIM scaleups. These are across a range of sectors with Software-as-a-Service the sector most represented in the list.
The figures show that 62% of AIM-quoted scaleups have scaled for more than one three-year period, while 57% of private scaleups have achieved this. The AIM companies are more than twice as likely to grow turnover by more than two-fifths. More of the AIM scaleups are based in London and the South East, whereas the private companies have a better spread between the regions of the UK.
There were fewer fundraisings and less money raised than in the second quarter, but the figures for nine months show that £9.41bn has been raised, which is more than the £9.11bn raised in the whole of 2017.
Initial figures from Beauhurst for the third quarter of 2019, show the lowest number of deals in a single quarter in the past five years. There were 368 deals and they raised £2.83bn. The average deal size increased from £7.09m in the previous quarter to £7.68m.
There was a record £674m invested in artificial intelligence-based businesses, which is five times the amount in the second quarter.

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Research firm Technavio expects that the global crowdfunding market will have a compound annual growth rate of more than 17% over the period between 2018-2022. It says that blockchain technology and the emergence of niche crowdfunding platforms will help the improvement. The fastest crowdfunding growth will be in the Asia Pacific region.
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Innis & Gunn seeks beer cash

Scottish craft brewery Innis & Gunn plans to raise £3m to finance a new brewery and to open bars. Innis & Gunn currently runs three bars in Scotland and wants to open two more each year over the next three years.
The brewery is expected to open in 2021. Edinburgh-based Innis & Gunn sold 21 million pints of beer in more than 30 countries last year. In 2018, revenues improved from £22.4m to £23.9m, but the reported loss increased from £388,000 to £2.16m. There was a fall in gross margins due to higher costs and a dollar foreign exchange hit. There were also higher overheads and a poorer performance from bars, which had been too dependent on food.
The new brewery will enable production and warehousing to be brought in-house and enable costs to be better controlled.
There are a range of shareholder benefits offered dependent on the amount invested. These include brewery trips and a 20% discount on the company’s pubs, brewery and online shop. Anyone investing £50,000 or more will also receive a branded beer fridge with their name on it and one year’s supply of beer, which is defined as 365 bottles and cans. 
In 2017, US company L Catterton injected £15m for what was then a 27.9% stake in the company. This is Innis & Gunn’s third crowdfunding campaign and it is raising the cash through Seedrs. So far, £1.09m has been raised at a pre-money valuation of £149.8m.

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The 10th VCT & EIS Investor Forum is being held at the Leonardo Royal Hotel London Tower Bridge on Thursday 21 November.
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Tidal energy technology developer Nova Innovation has nearly raised the £500,000 it is seeking on the Seedrs platform. The pre-money valuation was £28.2m. Nova has installed three turbines offshore of the Shetland Islands and they have been generating electricity for more than three years. 

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