Investment Strategy
The Haatch SEIS Fund invests in a portfolio of 10-15 pre-seed technology companies. We invest in less than 5% of companies we review and have established a well-defined strategy based on experience from the team’s personal successful entrepreneurial exits and over 70 investments across the last 10 years.
What do we invest in?
The Haatch SEIS Fund invests in B2B software companies solving deep pains for customers. Buyers purchase emotionally due to pain, recognition, achievement or another reason. However, the strongest motivation for a purchasing decision is a pain in the present. Imagine a nail in your leg: nothing else matters until resolved. By addressing these pains with products, companies can become essential to their customer’s operations and, with retention mechanisms built into the product, can build solid and long-term relationships and incredibly valuable and enduring companies. The question that drives our investment diligence is: “What’s the 3 a.m., stare-at-the-ceiling visceral pain for your persona?”
Our Differentiation
Haatch are entrepreneurs that have built and successfully exited their businesses and driven them in most instances from £0 in revenue to collectively more than £100m+, coming together to invest early and support companies to be successful. Our focus on helping portfolio companies build scalable sales machines to reach their first £1m of annual recurring revenue means Founders seek us out for our expert support, and when Founders have abundant choice of which investors they want to work with, Haatch is chosen because of our strategic value.
Why should SEIS form part of a portfolio?
Brian Moretta, Head of Tax Enhanced Research at Hardman & Co recently wrote on ‘Does Consumer Duty oblige you to add venture capital to client portfolios?” which sparks an interesting debate. With the introduction of Consumer Duty this year, portfolio diversification is now more important than ever.
He says, “it is true that individual venture capital investments are riskier than the usual quoted equities or bonds, even after the excellent tax reliefs that SEIS, EIS and VCTs bring. But as a whole, they are also a diversifying asset class, and this is the key to making them essential investments.”
He also adds, “If past performance is replicated, you can improve expected returns without increasing portfolio risk. A sprinkling of venture capital should be a normal part of most investors’ portfolios.”
Brian has written a summary of his original white paper, which is highly relevant and a quick read. You can read Brian’s latest summary of his original white paper here.
“The team brings very strong entrepreneurial knowledge, with particular experience across a variety of digital businesses. The recent expansion of the team should ensure that it has a comfortable capacity for its current level of activity.”
– Hardman & Co, November 2023
“Despite being only three years old, the Fund has already made 74 investments into 66 investee companies for a total investment amount of £11.3 million. Investments made in the most recent tax year are still held close to cost, while the first and second tax years are valued at 1.81x and 1.42x respectively, and are above the market averages for those same tax years which already shows some promise”
– MICAP, May 2024
The Haatch EIS Fund invests in Seed-stage B2B businesses that have proven their product solves a deep pain by securing contracts with a consistent customer profile and showing early signs that customers will renew or expand those contracts. We target a minimum of £10,000 of monthly recurring revenue; however, in most instances, companies have more.
Haatch EIS and SEIS Funds both target 10x blended returns to investors (not guaranteed) and offer a diversified portfolio of investments.
Comparatively, The Haatch EIS Fund has a more concentrated portfolio than The Haatch SEIS Fund as it invests at a later stage where companies have more information to diligence and, therefore, higher confidence levels for success.
The tax treatment of each Fund depends on the individual circumstances of each client and may be subject to change in future.
Haatch VIP, exclusively available to existing Haatch fund investors, invests in businesses outside the scope of The Haatch SEIS Fund or The Haatch EIS Fund for reasons such as high valuations, B2C rather than B2B, which is our core focus or non-tax efficiency.
Haatch VIP is a non-discretionary vehicle where investors carefully make investment decisions on companies presented by the Haatch team; however, it is not diversified as it’s a single-company investment.
By being exclusively open to investors in the Haatch SEIS or EIS Funds, VIP opportunities present the opportunity for investors to invest in sectors they align with, increase their portfolio diversity and become an active part of the Haatch community.
The tax treatment of each Fund depends on the individual circumstances of each client and may be subject to change in future.