In the first of our EIIS industry profiles, Kevin Canning of Quintas kindly provided some insights on EIIS and their Innovations Fund.
Please tell us a bit about Quintas and your offering?
There are several different businesses within the Quintas umbrella:
- Quintas Wealth Management is a regulated investment broker with 4 staff
- Quintas Partners is a full suite accountancy practice with 45 staff in Cork and 20 direct staff members in Kerala, India.
- Quintas Capital operates the EIIS Fund and is a corporate finance house engaging in M&A, early stage fundraising and asset backed investments. I am shareholder in this part of the business.
- Quintas Energy is an asset manager for the renewable energy space headquartered in Seville but offices in other locations around the world
- Quintas Power develops renewable energy facilities globally.
Tell us about yourself Kevin?
- I am the investment director of The EIIS Innovation Fund. I created the fund and run it with my partner Brendan Moran. My background is in tax structuring which lead me to EIIS investing. I have been a public market investor for the past 10 years and transitioned to private market investing later. I am based in Cork City.
What is the the advantage of using your Fund a EIIS investor?
- Diversification is the main benefit to any EIIS Fund over one off investments. Relying on an experienced management team to provide this diversification is also key. One of the key traits of our investments is that at least 5% of our investment is convertible equity with no cap. Therefore, we are encouraged to invest in high potential companies and we encourage companies to be innovative.
How do you communicate with your investors ?
- I communicate via our investor portal powered by DocSend – it’s an innovative communication tool that allows me to send confidential information that cannot be printed or forwarded and only accessed by investor emails. Dropbox purchased DocSend recently. I also have a direct relationship with most of our investors and I am always happy to meet investors for a coffee.
What sort of investments do you look for?
- We have two types of investments we look for, (1) The largest and safest investments that qualify for EIIS and (2) High growth companies with large valuations. Our preference shares are best protected with these types of companies.
Can you give examples of your investee companies?
- Velo Coffee Roasters, Ascend Cloud Solutions and All Real Nutrition. We are about to close 4 more investments, two of which are innovative technology companies, one is a consumer facing wellness brand and the other is an electric car charging platform.
Can you tell us about the due diligence steps you take?
- We complete detailed due diligence and often look at investments years in advance of investing. For example, I have several companies working towards investment in early 2024 provided targets are hit. This allows us to work with entrepreneurs long before we make investments. We have an investment committee of 3 experienced business people who all vet the investments and must approve investments before these are made. Brendan and I do all the research and due diligence prior to the investment committee. We often allow companies to face off against each other in an investment committee. For example, our last investment committee had 7 companies of which we only invested in 3.
What advice would you give an EIIS investor?
- There are different types of EIIS investors and advice should be different for each. If you are chasing the fixed income return, I advise using an EIIS Fund for diversification. If you are an EIIS Angel investor, I would avoid investing too much in any one company as early stage investments are difficult to get right. However, if you spread your risk with a 40% refund, you have a great chance of success. In terms of advice to non-EIIS investors, I would advise to learn about EIIS and invest using EIIS. It’s a great way to get cash out of holding companies too.
- In terms of selecting EIIS funds, only invest in funds that have a pipeline of investments sufficient enough to allow you to claim your tax relief. You cannot claim your tax relief until such time as the fund invests the capital. We are committed to having our capital invested within 6 months of year end which allows investors to claim their tax relief.
How do you see the current economic backdrop affecting your funds?
- Its difficult to imagine but the current economic climate for funding is great for EIIS Funds. Many venture capital funds are offering very poor valuations to companies and this is not an issue for EIIS Funds. Therefore, we are getting access to strong companies who would likely have been venture capital investments 12-18 months ago. This is also a great time for VC debt funds for the same reason.
What changes would you like to see with EIIS Legislation?
- One of the main pain points is the “firm in difficulty” rules (i.e. if a company is older than 3 years and has accumulated losses, it may not qualify for EIIS). Its not necessarily an issue for us as regulated investment funds are trusted to invest in these types of companies. However, it can still be a pain point for investing non-regulated EIIS investments.
Thank you to Kevin for his time participating in this interview.