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Investing in high-tech industries – Dr Ilian Iliev, EMV Capital Evergreen EIS Fund - YouTube
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hello I'm Alex Davies found of wealth
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club today I'm with dr. Ilion Iliev
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managing director of env Capital hello
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alien Alex and first off tell me about
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EMV capital sure so in the capital is a
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specialist investor in Indust what we
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call industrial high tech companies in
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the UK and an outside of the UK and
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essentially we look for outstanding
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businesses that have a proprietary
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technology that can have a substantial
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impact in the relevant markets in the
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energy space high-value manufacturing
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automotive smart cities mentor with very
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high growth potential and you've got me
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is fund
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what's it aim to do for investors how
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many portfolio companies would you
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typically be invested in so it's
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important to note that we've been on the
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market for a while so we have built our
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business on the back of syndicating
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deals with family offices and corporate
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VCS and the es fund complements our
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strategy so basically the S fund would
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be Co investing in our investments for
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any investor coming into the years fund
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it's an evergreen but when a chanc of
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money that they pretend they would
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typically get exposure to four or five
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businesses we invest in so tell me about
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yourself
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you know why should you why should I
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invest with you what's the what
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experience do you have in managing money
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sure I was an important question so for
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my whole professional life I've been
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focused on the intersection of
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entrepreneurship
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industrials energy and high growth
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finance my very first business was in
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one of the most challenging environments
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in the world
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building up to a medium and high voltage
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installations in an industrial context
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and I've started a number of other
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businesses that once again are focused
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in IP knowledge intensive areas in the
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context of EMV capital we are working on
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a very important intersection of
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interest of UK high-growth companies
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looking to grow internationally the
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interests of corporate corporates and
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corporate VC's in backing such
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businesses and of course the interests
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of private investors to get exposure to
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interesting companies in a space where
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they don't necessarily have access to so
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can you give me so many examples of the
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types of company you are looking for so
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I'll give examples in the context of
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what we've already backed one of our
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businesses cubot is a focused on
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bringing automation and robotics to the
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building industry it's an industry that
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is behind other spaces in terms of
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automation and digitization and they're
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built from bottom up a business that has
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30 plus people bringing energy
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efficiency to the buildings to the
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robotic installation method we've worked
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with such businesses from the outset in
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helping them build the technology
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solution and the market fit in where
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they can scale another example is a
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company called point drop who are
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building if you will the smarts to
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buildings video analytic chips to
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buildings which they're able to link up
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to other applications around energy
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efficiency around usage bringing massive
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savings to the owners of buildings so we
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tend to look at such businesses that
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bring not only brilliant and innovative
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technology but also where the teams have
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a very good understanding of the market
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that they're trying to crack and how
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they're going to go about it and why do
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you find these dales well the good thing
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the good thing about marketing is that
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50% of marketing is wasted if you only
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knew which 50% the reality is that we
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look at deal flow from all sources but
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the strongest to flow sources are coming
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from corporates our link of industry
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experts as well as some of our core
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investors and why would a company choose
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you as the investor we see ourselves as
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a
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value-added investor many do say that
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but from our perspective my team is
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composed of people that have built
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businesses are interested in building
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the business rather than passive
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investment by providing passive
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investment support to such businesses
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it's not the best fit for all companies
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some companies prefer not to have
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investors involved in their decision
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making but our view is that it is really
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complex environments that our company is
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operating and they need all the support
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that they can get from ourselves as a
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team from our corporate network and from
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our experts
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the EIS fund fairly new but have you had
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any successes yet or can you talk about
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successes you've had previously was run
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on EIS investment so we've had we've had
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an exit that was in the circle economy
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resource efficiency space we made a good
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return on that on that investment a
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number of our portfolio companies have
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had multiple follow-on investment rounds
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and in our space where it takes a while
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for a company to get to an exit
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a good way to measuring is you know are
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you able to get the follow-on rounds is
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it at an uptick is the company meeting
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its milestones and I think the other way
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to measure our success is by the co
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investors that we get we have Co
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invested with the likes of ABB Ventures
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philips Lighting now called signify
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Flextronics Evonik industries and others
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and how long would as an investor how
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long would I expect to get woman when
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would I expect to get my money back so
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in in our space in general or on
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knowledge intensive businesses the safe
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and prudent way to go about it from an
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investor's perspective is to expect an
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exit anywhere between 5 & 7 years from
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the investment and what would you expect
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that typical exit to look like is it a
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trade sale floating I mean it's the same
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as with most VCS
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most of the exits we expect from trade
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sales we do expect some IPOs in the UK
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and elsewhere but I want to add two more
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things with our strategy one is that we
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even where it's unlikely to be an exit
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that shoots the lights out if you will
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we're still looking to work with the
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management team of the company to
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actively find an exit for the investors
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perhaps to a management buyout
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that is one aspect the second aspect is
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that it's not enough just to say that
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the obeah trade cell we actively look
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from the moment of the investment what
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is the exit route for the company who
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are the likely buyers and we look to
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build links with those likely buyers so
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that a few years down the line when the
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company is ready for an exit that we are
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able to fast-track such discussions and
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failures have you had any of course but
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what I like to mention any specific
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names but as with any player in our
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space you know you cannot escape
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statistics I think if the question is
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how do you manage failures but also how
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do you work with the companies to
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recover from potentially catastrophic
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situations once again we're very
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hands-on so you know we roll up our
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sleeves and when companies have been in
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difficulties we have come in in a big
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way to help the companies recover from
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such such problems so if I put my money
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in your a is makers into five companies
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typically what would you expect the
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failure rate to be in that I know it's
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not a science penalty well the typical
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statistics are in a portfolio of ten
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companies you expect to successes two or
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three companies to give you a moderate
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moderate return to of the object
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failures and then the rest are kind of
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money back we're trying to do better
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than that we our focus is not on
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building unicorns per se our focus is on
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building good sustainable businesses
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backed by fundamentals we think that
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that approach means that the companies
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we back have to take less risk than in a
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classic VC approach in turn that means
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that we think we can we can balance out
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the portfolio a bit better so what sort
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of returns are should investors expect
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the target returns for the years from
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portfolio is 3x not considering the the
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tax return and within that of course to
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be you know some hire some Lord yeah a
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is is very risky how do you mitigate the
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risks in a number of ways I mean for the
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first thing is that you know investors
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get the es tax return partly as a way of
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compensating them from the government's
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perspective for taking up the addition
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risk we don't rely on that we have our
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own risk mitigation strategies some of
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it is by taking a an active or keep on
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talking about that but taking an active
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role in the management of the company we
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tend to take a broad seat with the
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businesses there is a number of if you
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will negative rights in terms of things
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the company need to asks us needs to ask
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us for permission to do things around
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budget approvals and working with the
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company together to build up the
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business plan and to change the business
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plan when things aren't working
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as the company continues to grow we look
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to build links with good and strong
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investors that to ensure that the
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company has the liquidity necessary as
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it grows when we back a company we tend
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to look at them having a longer cash run
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wait and sometimes they want that means
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a bit more dilution but it also means
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that the company has the resources to
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fulfill its business plan and finally I
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mentioned the the links with corporates
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we feel that working closely with
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corporates both as investors and
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industry partners the risks the
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proposition significantly in terms of
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giving them access to market and giving
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them access to corporate resources to
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grow cerillion I'm going to invest in
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any is this year
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why should I invest with you I think
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it's a very good diversification to any
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investors investment portfolio the UK is
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quite unique where you can get exposure
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to venture capital types of investments
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for relatively modest sum of money that
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only exists in the UK but at the same
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time you should be very cautious in
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terms of where you put your money and to
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think about how the strategies of the
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different tiers fancy investing fit
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together we provide a diversification
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option and we provide a specific
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exposure to the industrial high-tech
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market alien lef thank you very much
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thank you
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you
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you
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