www.edge.uk.com Issue 19: March 2017

Edge InvestmentsSafeguarding your capital. Working hard for your profit.

EDGE INVESTMENTS BACKSDISRUPTIVE VIDEO MARKETPLACE

PLATFORM NEWSFLAREA S announced in December 2016 Edge Investments has

backed leading open video platform and fast growing Britishmedia technology company Newsflare.Newsflare is a video marketplace platform for video creators,licensing user generated content (UGC) video to some of the world’sbiggest media players. Newsflare matches video content to demandand distributes the content to clients and partners around the world.Edge has invested £2.4m for a significant minority shareholding andwill take a seat on the board. This marks the first investment fromEdge Creative Enterprise Fund (see page 2 for details); The EdgePerformance VCT will also invest alongside the Edge CreativeEnterprise Fund. Edge Investment Director David Fisher commented: “This is anexciting deal for both Edge and Newsflare. The growth potential forthe sector is enormous and we are particularly keen to supportNewsflare’s expansion into the lucrative US and Japan markets.Edge has a very strong track record of identifying, nurturing anddeveloping early stage, leading creative enterprises.” https://www.newsflare.com

Monty Python star and one of the UK’s best-loved television personalities Michael Palin willreturn to narrate a second series ofinternational multi-award winning pre-schoolanimated series Clangers, produced by EdgeInvestments portfolio company, Coolabi Group.The second series is in production and will airin 2017 on CBeebies in the UK. The new 26 x11 minute episodes brings the total numberof episodes to 78. Clangers has been aninstant hit with parents, pre-school childrenand fans of the original series. It has wonnumerous awards including the 2015 BAFTAfor Best Pre-School Animation and BroadcastBest Pre-School Programme. Series 1 hasalready sold to the USA , Australia, Canadaand has several sales pending via itsinternational distribution partner BBCWorldwide.

Share Consolidation - Edge Performance VCT On 18 August 2016, the Board of Edge Performance VCT resolved toinvoke the share conversion provisions in the Company's articles ofassociation, such that all of the "planned exit" share classes in the VCTwere consolidated into one share class. Consequently, all C Shares, DShares, E Shares, F Shares and G Shares were converted into I Shares;completion of the conversion took place on 16 September 2016.

The conversion was undertaken on the basis of the net asset value pershare of each share class to be converted, relative to the net asset valueper I Share, meaning that the value of each converted shareholder'sinvestment immediately following the conversion was unchanged.

The H Share class, having a different, "evergreen" investment strategyto all of the other share classes, was not part of the conversion.

Consequently, the VCT now has only two classes of shares, namely the"evergreen" H Share class and the "planned exit" I Share class.

PALIN RETURNS FOR SECOND SERIES OFCOOLABI’S MULTI-AWARD WINNING CLANGERS

Coolabi Group Update – See p2

Edge well placed as UKgovernment makes creativeindustries a key pillar of post-Brexit growth plan

During 2016 Edge added twospecialist investment professionals:Steve Carle joined as InvestmentDirector and Joanna (‘Jo’) Smith asInvestment Manager.

Steve, an experienced private equityand venture capital specialist hasenjoyed a successful 20 year careerwith the UK's two leading mid-market private equity companies - 3iGroup and LDC, the private equityarm of Lloyds Banking Group -leaving in 2010 to take on a number ofprivate successful businessopportunities, before joining Edge.

Jo Smith ACA, has spent her careerin finance both in practice at PwC andthen in an investment role at Channel4, where she helped launch a newfund to invest in UK independenttelevision production. The UK government has made the

creative sector a priority in its newindustrial strategy, announced inJanuary 2017. The governmentidentified the creative industries asone of five sectors to receive specialattention in its Industrial Strategy

Green Paper, a springboard fordiscussion of future policy andlegislation. As one of five "world-leading sectors" recognised in thereport, creative businesses areinvited to approach government withproposals to boost their industries.

Edge Investments Founder andChief Executive Officer David Glickcommented: “This is a hugelysignificant development for the UKcreative industries. Investors whomay have previously shied awayfrom the creative industries will beclosely examining the opportunitiesthat this shift presents; as one of theUK’s most dynamic and innovativespecialist investors EdgeInvestments – and its portfolioinvestments through EdgePerformance VCT and EdgeCreative Enterprise Fund - is wellplaced to benefit from this enhancedsector profile and investor focus.”

ITV Chairman Peter Bazalgette isalso tasked with conducting anindependent review to identifyopportunities for growth throughoutthe sector. It marks the first time thecreative industries have beenformally recognised in a Britishindustrial strategy.

EDGE KEY CONTACTS ABOUT EDGE GROUPEdge Investments is a leading investment boutique for the creative industries.

The Edge difference is its unrivalled network of creative industries professionalswhich ensures quality deal flow and industry-leading expertise to evaluate opportunities.

David Glick Steve Carle David FisherFor more information visit www.edge.uk.com

Jo Smith

Edgestrengthensinvestmentteam

Just over a year ago EdgeInvestments launched Edge CreativeEnterprise Fund , a new £40m fund,with UK Government support, toinvest in high growth companies inthe creative industries. The new fundbrings together private sectorfunding from leading institutions andhigh net worth individuals, with asignificant investment from theGovernment’s British Business Bank.The fund is targeting a minimumthree times return for its privateinvestors over its 7 - 10 year life.

EDGE Investments hasannounced it will invest up to

£10 million in the thriving UKtelevision production industry.Television is a major contributor tothe UK creative industries economy. Annual revenues for independenttelevision were at an all-time high of£3bn in 2014. In just ten years,independent TV production has grownfrom a cottage industry to a world-beating multi-billion pound sector. Indie TV production companies haveshown their innovative instincts,utilising their intellectual property to

Edge PerformanceVCT - Changes inperformanceincentiveIn a move fully supported by EdgeInvestments, in light of the share classconsolidation process, EdgePerformance VCT has removed theprevailing carried interest in the Ishares' fee structure. In order to drivefuture prosperity in the portfolio, andthe performance of the InvestmentTeam, the VCT Board has begun theprocess of creating a newperformance incentive scheme. TheBoard is consulting with shareholderrepresentatives and studying bestpractice across the VCT space in orderto present the optimum structure todrive shareholder value.

Edge CreativeEnterprise Fund

EDGE INVESTMENTS TARGETS £10 MILLIONFOR UK TELEVISION PRODUCTION

dominate television programming inthe UK and now throughout the world. Edge offers a distinct advantage asan independent investment partnerin a market dominated by tradeinvestors: rather than looking to takedistribution rights alongside ourinvestment Edge can offer cleanequity capital wholly aligned withmanagement’s growth ambitionsunfettered by deals with tradeinvestors seeking control and limitingexit opportunities, and will providementoring and support to investeeSMEs.

Intent HQ, the leading provider ofadvanced customer profilingtechnology, has signed a deal withtelecoms giant O2. CEO JonathanLakin commented “We are delightedto have signed a multi-million poundcontract with Telefónica UK (owner ofO2) . The wider market is nowrecognising Telefónica's lead in usingdata to drive new insight andrelevance for customers, and we arethrilled to be helping them achievethis.“

Intent HQ has acquired Logameal, theA.I. driven photography-based tracker.The acquisition provides Intent HQwith a significant market advantage:

Here are some highlights:

Coolabi Group has enjoyed anenormously successful 12 monthsacross a number of its leading familyentertainment brands . In January2017 Coolabi has announced asecond series of international multi-

award winning pre-school animatedseries Clangers. In October 2016Coolabi launched the biggest evermarketing campaign for Clangers(#ClangersForKindness) on 21October, to coincide with the feel-good festive season, and

encouraging kids, their parents andthe entire universe to spread a littlekindness. Clangers for Kindnessencompassed a full marketingcommunications campaign taking inTV and radio advertising, YouTube,PR, sponsorship, digital, social andblogger interaction.

Warriors - a series of fantasyadventure novels for 8-13 year oldsthat follow the adventures of fourClans of wild cats – has over 30million books sales to date, and islicensed in more than 30 languages.Coolabi is developing plans to takethe brand beyond books to its legionsof global fans and has recentlyannounced a feature film option withChinese film company AlibabaPictures; in a coup for the GroupDavid Heyman, the Harry Potter andPaddington film series producer, hastaken the helm of the film’sdevelopment.

Scream Street, the number 1CBeebies kids TV show based on thebooks of the same name authored byTommy Donbavand and produced by

Coolabi, has been soldinternationally to Australia (ABC),Latin America (Discovery Kids), India(Amazon) and Norway (NRK). Theseries is distributed by Coolabi’sdistribution partner ZDFEnterprises.

Beast Quest is the bestsellingseries of children's fantasy novels,with more than 16 million copiessold to date. Over 120 titles havebeen published with HachetteChildren's Books (UK), further titlesare planned for the brand’s 10thanniversary in 2017. New licensingagency deals have recently beensigned in Germany, France and Italy,markets where the book series areflourishing.

PORTFOLIO UPDATE - COOLABI GROUP

PORTFOLIO UPDATE - INTENT HQ PORTFOLIO UPDATE - MIRRIAD

INTENT HQ INKS DEALWITH O2; ACQUIRESLOGAMEAL

MIRRIAD SECURES $15 MILLION INFINANCING

Intent HQ’s platform currently usesdata to understand customers as wellas you would a close friend; theLogameal algorithms will add theintelligence to optimise eachcustomer’s journey by identifyingsequences in behaviour that identifyoptimal intervention moments. As aresult, organisations will be betterpositioned to communicate with theircustomers in a highly individualisedand more relevant manner. This willchange the way marketers thinkabout targeting customers.

Mirriad Advertising, the technologycompany reshaping the future ofvideo advertising, announced inMarch 2017 that it had closed $15million in financing, led by IP GroupPLC, alongside Parkwalk Funds, witha minority investment from UnileverVentures, the venture capital andprivate equity arm of Unilever.

Mirriad is investing the capital intofurther technology designed toincrease the scale of its native in-videoadvertising (NIVA) offer and build salesand content partnerships with leadingcontent owners and distributors inmajor markets.

Mirriad’s proprietary technology

provides brands an integratedapproach to reach audiences whilecreating additional revenueopportunities to content owners anddistributors. Where consumers oftenskip ads that interrupt their showsand videos, Mirriad digitally integratesbrands directly into premium videocontent by embedding products,signage and even video.

Poised for growth

Edge Investments 1 Marylebone High Street London W1U 4LZ Telephone: 020 7317 1300 www.edge.uk.com Email: info@edge.uk.com

This document has been approved by EdgeInvestment Management Limited (the“Company”), a company authorised under theFinancial Services and Markets Act 2000This document does not constitute or form, andshould not be construed as constituting orforming, part of any offer or invitation to sell, orany solicitation of any offer to purchase or

subscribe for, any securities in EdgePerformance VCT plc or any other bodycorporate or fund, or an invitation orinducement to engage in investment activityunder section 21 of the Financial Services andMarkets Act 2000, nor shall it or any part of itform the basis of or be relied on in connectionwith any contract therefor.

No reliance may be placed for any purposewhatsoever on the information contained in thisdocument or on assumptions made as to itscompleteness. Some of the statements in thedocument represent the personal opinions of thedirectors of the Company. No representation orwarranty, express or implied, is given by theCompany, any of its subsidiaries or associated

companies or any of their respective advisers,officers, employees or agents, as to the accuracy,fairness or completeness of the information,opinions or statements based on the belief of thedirectors of the Company contained in thisdocument or expressed in the document and noliability is accepted for any such information oropinions or statements based on the belief of the

directors of the Company (which should not berelied upon) or for any loss howsoever arising,directly or indirectly, from any use of thisdocument or its contents or informationexpressed in the document.Any decision to invest in Edge Performance VCTshould be based upon consideration of itsprospectus dated 8 November 2013 as a whole.

POST-BREXIT BRITAIN SEEKING A CREATIVE BOOST

Ed Vaizey MP is theConservative Member ofParliament for theWantage and DidcotConstituency.

Ed served as the Ministerfor Culture and the DigitalEconomy from 2010-16. Inthat role, Ed wasresponsible for the roll outof the successful ruralbroadband programme,the introduction of 4G, andtax credits for film,television, animation andvideo games, which havemade the creativeindustries the fastestgrowing part of oureconomy.

The House of Commons has voted to allow the PrimeMinister to trigger article 50. The process of leaving theEuropean Union is underway, and it will dominatepolitics for years to come. Amid such turmoil, it is easyto lose sight of some of the opportunities that exist forthe UK’s creative industries.

The creative industries, of course, are this country’sgreat success story. It was a privilege to be theirchampion as a Minister for the last six years, and to seethe sector grow at three times the rate of the UKeconomy as a whole. Direct government interventiondoubtless had an impact. Tax credits covering film,television, video games and animation, as well as othersectors, helped inward investment and home-growncompanies to expand. A dialogue between the techindustry and government was fostered by the creation ofTech City, and there was a relentless focus on skills, andupdating them for the 21st century. We also helped buildout Britain’s digital infrastructure, and are well-placedto see it enter the next phase. Underpinning all this wasBritain’s unparalleled record of creativity, a culture ofindividualism and eccentricity embodied in our worldclass arts – music, theatre, fashion, television and thelike. Given all this, what is the future for Britain’screative industries in a Brexit world?

Alongside the negative aspects of Brexit, theGovernment is keen to focus on the positives. Forbusiness, the biggest change since the new governmentcame into power in July has been the focus on a newindustrial strategy. This is not a nostalgic return to the1970s culture of “picking winners”, but an attempt tobring focus to government support to a range of differentsectors.

One of the winners has been Sherry Coutu, theCambridge-based entrepreneur who has tirelesslyworked to strengthen links between Silicon Valley andthe UK. Her campaigns have helped pivot thegovernment away from start ups, where the ecosystemis well-developed, towards scale ups. The IndustrialStrategy Green Paper published in January by theGovernment makes it clear that the Minister for smallbusiness will now have an explicit role as a Scale Upchampion, working with Sherry’s Scale Up Institute andother relevant bodies, like Local Economic Partnerships,to help businesses grow.

One of Sherry’s other, imaginative, ideas has also beentaken up. It’s possible to use HMRC data – specificallyVAT returns – to identify companies that are in theprocess of scaling up. This will enable the governmentto target them with bespoke advice, or supply mentoringadvice from companies that have already achieved such

a transition. I was delighted to see this proposal in theGreen Paper, as it shows the government is prepared tothink imaginatively about how it can help businesses inthe future. It’s also instructive that the Green Paper willlook at how businesses outside London can besupported in gaining access to capital.

In the run up to the publication of the Green Paper, therewas a huge amount of concern that Britain’s mostsuccessful sector – the creative industries – would beleft out. Thankfully that is not the case. PeterBazalgette, the outgoing chairman of the Arts Council,and the incoming chairman of ITV, has been asked tocarry out what is described as “an independent reviewinto how the UK’s creative industries, like our world-leading music and video games industries, can helpunderpin our future prosperity by utilising anddeveloping new technology, capitalising on intellectualproperty rights, and growing talent pipelines”.

So all of this is good news. It’s the start of aconversation, and one the readers of this newsletter,with their real life experience of starting, growing andinvesting in successful creative industries companiesshould be involved in. Of course, not all Green Papersare perfect. Missing from the discussion is any idea howwe will access the skills our businesses need once freemovement comes to an end. We need to be imaginative,and argue the case for ensuring that people with theright skills – and their families – can come to thiscountry with as much ease as possible. One smallfootnote on the Green Paper. I couldn’t help a wry smilewhen I saw that the Government’s “ChiefEntrepreneurial Adviser” would do a review intoentrepreneurship. I have no idea who the chiefentrepreneurial adviser is, or what they do, and if theyare any good, they should know entrepreneurs are born,not made – though as the rest of the Green Paperacknowledges, they can benefit from support and advice.