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Opportunities in Technology SMEs Continue to Grow

The UK private equity (PE) and venture capital (VC) markets are alive and strong, according to speakers at this week’s Who’s Who at the Zoo event at London Zoo. The event saw investors, investment providers and potential investee companies in the SME and EIS space brought together to discuss their needs and wants and the market in general.

Richard Roberts, Oxford Capital’s Director of Private Clients took part in an EIS panel which also included Enterprise Investment Scheme Association Director General Mark Brownridge and Beauhurst’s senior consultancy associate Henry Whorwood.  Whorwood, quoting data from the specialist data provider’s platform which focuses on ambitious British companies, stated that in 2017, a record £8.7 billion was invested in UK SMEs through PE.

His conclusion was that, to date, SMEs are not being affected by Brexit.  The sector he singled out for particular mention was technology, notably it’s fintech sub-sector. And within fintech, he highlighted insurtech and agritech as especially fast-growing subsets within this space.

Oxford Capital has recent investments in both these areas, having already recognised the opportunities that exist; the first was into insurtech start-up Wrisk at the end of 2017, leading a £3 million EIS-qualifying funding round. There is massive potential to disrupt the huge insurance industry with incumbent providers slow to adapt to the rise of smart phones and deliver top notch experiences to ‘mobile-first’ consumers. The aim is to help consumers obtain cover for cars, house contents, gadgets and other possessions, using a slickly presented and easy-to-use app.

Such has been the progress of Wrisk, which has now partnered with Hiscox, and has commercial agreements in place with BMW to deliver insurance for cars sold in the UK, that another investment round was recently offered to Oxford Capital Co-Investor Circle (CIC) investors.

In the field of agritech, Q2 2018 has seen Oxford Capital involved in funding Xihelm. The firm is developing specialised agriculture-applied artificial intelligence and a machine vision algorithm that sees, understands and acts in the indoor farm to enable roboticised indoor harvesting. This represents an opportunity to optimise crop yield and to cut high labour costs. Xihelm’s first product is a software solution that uses off-the-shelf industrial robotic arms to automate the harvesting process in greenhouse tomato farms. It is currently undergoing field trials with a large commercial producer in the sector.

As the global population continues to grow at pace, the potential benefits and market applications could be both lucrative and game changing on an international scale. And CIC investors are likely to gain access to investment opportunities in Xihelm in the near future.

The lesson here is that technology is not only an exciting investment sector, but that it covers a myriad of areas with growth opportunities. But, without the expertise to identify them and to work with the relevant companies, keeping up with the brightest and newest developments is nigh on impossible. Oxford Capital can certainly fulfil this critical role for its investors.