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Investment Spotlight
GROWING THROUGH TOUGH TIMES
Par Equity was born out of the financial crisis, but Partner Paul Munn tells Neil Martin
they are now leading the pack as one of the largest venture capital firms in Scotland
Starting a venture capital firm in 2008 might have seemed
like a brave decision, but it doesn’t appear to have harmed
Edinburgh-based Par Equity.
The four founding partners of the firm, Paul Atkinson,
Robert Higginson, Andrew Castell and Paul Munn, have
created a firm which likes to address the challenges of
investment in small, high growth potential companies.
The partners have differing backgrounds, but all have
experience in building, managing and exiting businesses
in a variety of industries as well as personal track records
as investors.
Munn said the firm’s Par Syndicate EIS Fund is unique in
the market as it utilises the experience of long-standing
angel investors.
“It leverages the experience and commitment of angel
investors in identifying and supporting investee companies
for the benefit of passive fund investors,” he said.
“The involvement of experienced investors is a key
ingredient in driving outperformance over the long term
and even more vital given the risk profile of the investing in
high growth companies.”
When searching for companies to invest in, Munn said
they look for businesses “that are doing things in new and
better ways”.
“This could be doing business more quickly, more
efficiently or in a new context,” he said. “Our investment
model harnesses the industry expertise, contacts and
experience of a highly motivated individual investor base,
drawn from successful entrepreneurs, managers and
professionals with directly relevant insights that can be
brought to bear at every stage.”
There are three key stages in the process: identifying
and evaluating potential investee companies; supporting
investee companies post-investment; and, assisting in the
exit process.
Munn said the firm has made a big impact over the last
eight years.
“The breadth of our investment portfolio embracing
hardware, textiles and med-tech as well as software has
shown that opportunities exist for EIS investors beyond
just the digital economy.”
As for engagement with advisers, Par Equity has seen them
become investors as well as introduce clients to the group.
“Par Equity has largely built its investor base directly
through its own network and by word of mouth. It has been
the case that IFAs and investment advisers have been
more likely to invest with us themselves than be a major
source of clients,” he said.
“That is, however, changing and we are actively engaging
with the adviser community based on our emerging track
record, differentiated product and their growing interest in
the EIS space.”
The future, said Munn, looks bright, especially as EIS,
as a distinct asset class, is returning to its purist roots of
supporting early stage risk based investing.
“Par Equity has always been a risk investor viewing the
tax benefits to be a sensible mechanism to address the
lack of capital available to innovative companies. As such
Par is supportive of the recent changes to the EIS rules to
discourage asset-backed, yield-driven products under the
EIS banner.
“As investors and their advisers become more familiar
with the asset class we believe it will grow significantly
as investors seek long-term income and value creating
investments and broaden their horizons from more
traditional financial products.”
EIS Yearbook 2016/17
57