FOR PROFESSIONAL INVESTMENT SPECIALISTS
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GOVERNMENT BACKED - GREAT BRITISH INVESTMENTS - EIS - SEIS - BR - SITR - VCT
E v e rg r e en Fun d Open
Praetura EIS Growth Fund
Next soft close 31st March 2021, with anticipated full deployment by 30th September 2021. Capital at risk.
c o ntact sales@praetura.co.uk praeturaventures.com
Praetura Inheritance Tax Planning Service The Praetura Inheritance Tax Planning Service (“PITPS�) is an asset backed investment solution that aims to provide individual investors with 100% relief from inheritance tax after two years whilst also generating a targeted return of 4.5% net of fees per annum.
Highly experienced management teams combining significant lending experience and proprietary asset management analytics Access to a diversified portfolio of asset backed secured loans
Investment in a Business Relief qualifying company
Targeting an annual return of 4.5%
For more information please contact sales@praetura.co.uk or visit praeturaventures.com
Capital at risk. Financial Conduct Authority 317845.
GOVERNMENT BACKED - GREAT BRITISH INVESTMENTS - EIS - SEIS - BR - SITR - VCT
M AGAZINE
With you for the long term GB Investments is a campaigning and information platform for the financial adviser community. Focussing on tax efficent investments such as EIS, Seed EIS, VCT and BR, our primary objective is to help you make informed choices for your clients, through in-house editorial and accessible research. Our platform brings the reader on a journey the whole way through to the portals of the trading platforms. We believe that now more than ever these investments need to become mainstream and to encourage and support this important sector we have included GB Investments within IFA Magazine. Our in-house editorial team produce articles that cover the core investment types as well as offering on-going insight into successful exits and new launches in the market
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N EWABLE
Februar y 2021
EIS THE DRIVE TO THRIVE GBI Magazine talks to Sanjeev Gordhan, Director at Newable Ventures about why – and how - the group’s sound business strategy can help deliver potentially higher returns for EIS investors
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ewable Ventures connects earlystage investors to some of the UK’s most promising SMEs and start-ups through EIS and SEIS. In particular, it offers the opportunity for investing in high growth, disruptive companies. The group prides itself in offering not just capital, but an eco-system of tailored services including advice and flexible workspaces to equity investment. Having secured the British Business Investments’ commitment of £10m in 2020, Newable are well placed to increase their level of investments over the coming years and help more and more businesses to thrive. This, along with their fund growth, will provide the platform to become one of the best pre-series A EIS funds in the market. The Newable Group focussed on supporting start-ups and SMEs across the UK and last year supported in excess of 25,000 SMEs, a figure reflective of that fact that Newable has been helping early stage businesses for over 35 years. Sanjeev links the history of the Newable Group to the Funds success, which was acquired by the group in 2017 and now plays a leading role in the venture capital EIS space.
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Having secured the British Business Investments’ commitment of £10m in 2020, Newable are well placed to increase their level of investments over the coming years and help more and more businesses to thrive
GETTING INVOLVED The Newable group pays close attention to these businesses with an established and complementary organisational structure. Sanjeev explains, ‘it can be challenging to really support portfolio business businesses but in our case it’s just a matter of speaking to our colleagues in other parts of the Newable Group. .’ He highlights a great example of this structure in action. ‘One business came to our attention
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that we had invested in 2017/2018. Once the investment was completed, and had secured sufficient runway to look at international expansion, we involved them on trade missions to India and Russia.’ The company ended up winning contracts in both countries. It goes to show that Newable really gets involved and having provided capital, it looks to support business in a myriad of ways; In its early days, the group supported businesses predominantly from London. However, as they’ve grown, they now provide services across the UK. One of the most innovative ways that they do this is through providing flexible workspace. Sanjeev elaborates, ‘the space part of our business is probably the longest-standing because we’ve always had property on our books and it’s a matter of how we’ve adapted the model.’ The most recent leap came with Newable’s acquisition of Citibase, a business which enables SMEs and Start-Ups to use flexible office space. Sanjeev is quick to highlight Newable’s position in this market, explaining ‘we fit in between Regis and WeWork. For us, as investors, we don’t want these small businesses spending ridiculous money on offices we want their initial stages to be as efficient as possible.’
have to tie into any services as such but they’ve got access to lots of things that will help them, whether that be workspace or advisers and of course obviously capital. This goes full circle to the investors, the better we are able to support our businesses, the more successful are investee companies are – which ultimately feeds into higher valuations and returns for investors. It is in my view one of the reasons why Newable has seen such a low failure rate in comparison to the EIS industry generally.’
The huge changes in working habits over the course of 2020 and the global pandemic leave Newable uniquely placed to adapt to these societal changes
THE PROCESS OF SELECTION AHEAD OF THE CURVE Sanjeev explains that Newable now has 60 locations across the UK, from Southampton to Aberdeen and emphasises that the huge changes in working habits over the course of 2020 and the global pandemic leave Newable uniquely placed to adapt to these societal changes. For many start- ups that have come through incubators and accelerators, there’s often the difficult question – what’s next? For many start-ups that have raised a post-seed funding round they find that they have outgrown their accelerator, and that’s when Newable can be especially helpful to them. Sanjeev explains, ‘we’re like an accelerator plus. They don’t
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Another key contributor to Newable’s low failure rate is their selection process. Being well-established, Newable’s networks with universities, accelerators, spin outs and seed funds is stellar. Sanjeev notes that the proprietary part of the group’s deal flow likely differentiates it from much of the industry, as ‘businesses come to us before anyone else, because they want access to our services.’ Newable’s advice team may help a business get into different territories or extend R&D and then approach the investment team. The group’s full process of selection is scrupulous. It starts with analysts looking at the opportunities and providing an
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initial screening. This proposal goes to associate level and then they work in tandem to develop a deeper understanding of the company. THE PROCESS OF INVESTMENT Newable’s investment team has a weekly pipeline meeting, when they discuss each of these opportunities that the analysts and associates are seeing. If a business makes it past the investment team then an investment director will ‘buddyup’ with a member of the investment committee. The group’s investment committee is another important facet. It consists of six independent investment professionals who represent multiple later-stage funds, or other types of investment houses. Sanjeev explains ‘depending on the type of investment we’re looking at, we’ll match the experience of an individual committee member so they can help the Investment Director build the potential case for that business, and present it to the investment team and committee.’
Over the last year, medical technology has seen stunning successes amongst EIS firms. It’s been a big part of Newable’s fund and will continue to be
PROVIDING SUPPORT One key challenge in 2020 was ensuring that Newable was supporting their portfolio companies throughout the pandemic and ensuring that they had sufficient runway.
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They facilitated this by the organisational structure already in place. In today’s climate, it is clearly important for the group to maximise the financial runway when investing, to mitigate any potential issues around raising finance. ‘Whether it’s increasing the round size or looking at what levels we have to put into the business in terms of their overheads and their costs, , these are the things we’ve been looking at a little bit more.’ Over the last year, medical technology has seen stunning successes amongst EIS firms. It’s been a big part of Newable’s fund and will continue to be. Sanjeev emphasises ‘there has been a lot of hype around medical technology but now we’re seeing some really good quality businesses here.’ Not getting complacent, Sanjeev concludes with a caution. ‘We’ve tightened our due diligence, especially at this moment in time. What we have noticed is that there is a lot of noise in the market with an increased number of companies looking to raise capital, so we have to ensure our due diligence is even more in-depth.’ Clearly, Newable are well-placed to thrive in the EIS market and are eager to continue capitalising on their considerable strengths and assets to identify, nurture and growing businesses into becoming future success stories. About Sanjeev Gordhan Sanjeev became Director of the Newable Ventures arm in May 2020. He is responsible for the strategic focus of the fund and angel network as well as its day to day management. Sanjeev started as an entrepreneur before going onto selling his own business, and spent five years as a Wealth Manager specialising in venture capital. He holds a diploma in Regulated Financial Planning and an MBA from CASS Business School.
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BLACKFI NCH
Februar y 2021
NEWER VENTURE CAPITAL TRUSTS:
A STRONGER OPTION FOR CLIENTS
As the tax year-end approaches, Vince Keen, Blackfinch, highlights the reasons why he believes that advisers should consider the benefits of newer VCTs as part of the due diligence process
ESTABLISHED TAX PLANNING TOOL
established, and all subject to HMRC’s strict criteria, investors can consider the benefits of newer offerings.
2020 was a silver anniversary for Venture Capital Trusts (VCTs). It is over 25 years since the UK Government launched these tax-efficient vehicles to encourage support for new and growing firms. To offset investment risk, VCTs offer 30% Income Tax relief (minimum holding period five years); gains exempt from Capital Gains Tax on sales of shares; and no Income Tax on any dividends.
These may offer greater growth potential through a more concentrated portfolio of high-quality, early-stage companies. Firms’ adaptability and resilience in the face of the pandemic are now integral to investment teams’ considerations.
Over the years, they’ve become popular with investors, reflected in fundraising amounts. In the tax year 2019/20, VCTs raised £619 million. While, due to the impact of the coronavirus pandemic, this was lower than in 2018/19, it reflects the continued appetite for VCTs. (Source: The Association of Investment Companies, 2020). With tax mitigation always high on the agenda, VCTs continue to feature in client portfolios. BENEFITS OF NEWER VCTS Within the VCT investment landscape there is a wide range of offerings. Investors can select from older VCTs, with many operating since the 1990s, through to newer VCTs launched in the last two years. With VCTs so well
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Shares in innovative new firms, that are well positioned for the future, can help to deliver excellent growth. This is alongside creating more diversification in a client’s portfolio. These kinds of investments can also make for a greater positive environmental, social and governance (ESG) impact. It’s worth exploring these aspects in more detail. HIGH PERFORMANCE HURDLES Older VCTs will contain a portfolio of mature holdings which might, on first glance, appeal to investors. However, one possible drawback of investing in these vehicles are fees which could dilute future returns. Many of these VCTs will have long ago passed through their hurdle for performance fees, which could dilute future growth for both existing and new investors. In contrast,
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newer VCTs will need to surpass their hurdle before a performance fee is payable, rewarding those investors with a greater share of the growth. UNLISTED, TECHNOLOGY-ENABLED COMPANIES There’s also a question around how well equipped older VCTs’ investee firms are for the pandemic, and the postpandemic world.
A new VCT has three years to deploy a minimum 80% of its capital into qualifying companies, with 30% of this needing to be invested within its first two financial years
This is another reason to consider newer VCTs. They will likely be focused on pioneering early stage, unquoted companies (which are not directly correlated to the listed companies/market volatility). Newer VCTs may also be investing in technology enabled firms. As these businesses are often web-based, offering their services online, they’re able to meet the pandemic head on. They could in some cases even benefit from upheavals. As
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customer trends evolve due to social distancing they can start to serve new requirements. One effect of the pandemic has been to accelerate the adoption of digital technologies by several years. Technologyenabled firms have therefore typically been least impacted by global lockdowns, and quite often the beneficiaries of them. Newer VCTs, especially those with a technology focus, are likely to have a much higher concentration of such firms in their portfolios than older ones. It’s useful to note that a new VCT has three years to deploy a minimum 80% of its capital into qualifying companies, with 30% of this needing to be invested within its first two financial years. This gives the investment managers time to assess deals over time, and gradually build a diverse portfolio of firms with strong post-pandemic growth prospects. PROSPECT OF DIVIDENDS Investing in a newer VCT can therefore bring the prospect of dividends. These could include special dividends from early exits, along with the objective of paying regular dividends in the future as the VCT matures. IN-BUILT DIVERSIFICATION An important aspect of newer VCTs is that they can help bring greater diversification into an investor’s portfolio. Most VCTs will have this effect, by giving investors exposure to smaller companies. However, with many newer VCTs investing in tech-enabled firms, investors can increase diversification through holding
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BLACKFI NCH
technology-related investments in their portfolios. Such investments these days can be in almost any sector. As teams invest at varying stages of growth, and across sectors, this can help to add more layers of diversification. Adding a VCT of this kind to a portfolio of existing mature VCTs can also increase diversification. This is through holding investments at different stages of maturity, with different VCT managers, employing different strategies. POSITIVE ESG IMPACT As investor demand for ESG-focused solutions grows, another benefit of newer VCTs is that they’re a way in, enabling people to support firms making a positive impact. Within the realm of tech-enabled firms, companies are often more likely to score well on ESG factors. Many of these firms, spanning sectors from health to education, offer solutions that can change the way we live and work for the better. And in terms of their own operations, they will be working with ESG at their core. Beyond individual firms’ output, there’s also a positive ESG impact more generally from supporting new, growing UK companies. They can strengthen the future UK economy through creating jobs and generating tax payments. They can also help to ensure that the UK remains a world leader in business, particularly in the area of innovation. SELECTING A NEWER VCT In considering newer VCTs to present to clients, advisers can look at providers that are taking a fresh approach. Those that offer value-based fee structures, clear technology mandates, tax-efficient expertise and a commitment to ESG, will be best placed to support advisers. This can help advisers in selecting from newer VCTs to find strong solutions for their clients.
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SOLUTIONS FOR INVESTORS AND SUPPORT FOR ADVISERS Blackfinch works in partnership with advisers to help meet their clients’ investment needs. A specialist in taxefficient investing, it develops solutions in response to adviser feedback. The Blackfinch Spring VCT is a newer VCT launched in 2019. It invests in early-stage technology-enabled firms with high growth potential, a strong focus on innovation, and underpinned by clear ESG values. The next share allotment date is 29th January 2021. The final application deadline is 28th January 2021. A 1.5% early bird discount is available for applications received by 28th January 2021, then reducing to 1% until 1st April 2021. For more information email enquiries@blackfinch.com, call 01452 717070 or visit www.blackfinch.com. CAPITAL AT RISK. Please refer to the product literature for all risk warnings applicable to the Blackfinch Spring VCT
About Vince Keen Vince Keen is Senior Business Development Manager, Blackfinch. Vince brings over 30 years’ experience in financial services, including 11 years as a Senior Business Development Manager at Octopus Investments, specialising in tax efficient investments. Vince began his career with TSB Bank, and then spent eight years as a financial adviser before becoming an IFA within a large regional practice. He then spent three years as a Business Development Manager with Aegon before moving to Octopus in 2008. He holds the Diploma in Financial Planning.
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E IS AN D SE IS
Februar y 2021
IS A
CHANGE GONNA COME FOR EIS AND SEIS?
As Chancellor Sunak prepares for his March Budget and the tax year-end looms, should advisers and paraplanners be bracing themselves for change to the EIS and SEIS landscape? EISA’s Mark Brownridge is in optimistic mood as he outlines why he believes you should keep talking to your clients with confidence about EIS and SEIS
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e are approaching the long slog that is the march to the tax yearend in April, a supremely busy time for everyone involved in our sector. Just as well there is nothing else going on in the world right now!! To add to the usual tax year-end madness, with the November 2020 Budget having been postponed until 3 March 2021, potentially there are also a number of tax and other economic rule and legislation changes to contend with. And just at that pivotal moment you are making your client recommendations! STICK OR TWIST?
Such uncertainty is unwelcome and financial planners are left with having to guess whether to stick or twist. Do you ‘twist’ and make recommendations based solely on rumours and heresay as to possible changes? Or do you
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‘stick’ and risk a ‘keep calm and carry on’ approach? You could be damned if you do and damned if you don’t. Who’d be a financial planner?
It’s clear that the Government needs to raise large amounts of money after a tumultuous 2020, economically speaking
And of course, this next Budget could be a humdinger. It’s clear that the Government needs to raise large amounts of money after a tumultuous 2020, economically speaking. It seems all bets are off as to where they will focus on trying to raise that money from. We have already seen CGT recommendations from the Office of Tax Simplification as
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well as IHT recommendations, threats of pension tax relief being cut and that old chestnut, a wealth tax. Desperate times call for desperate measures.
• Average employment growth for EIS funded companies is 86%.
WHAT ABOUT EIS AND SEIS?
• Within a year of investment, each £1M invested in EIS creates 4 jobs
Of course, EIS and SEIS offer investors exceptionally generous tax relief schemes themselves. So could they be in the firing line? We think not, for a number of reasons. This article sets out why.
Just short of 4,000 companies received EIS funding in 2018/19 meaning the schemes can justifiably claim to have created 24,000 jobs in that one year alone. Expanding the schemes can multiply that figure even further and keep our young, entrepreneurial companies on the path to growth. In addition, for every £1 invested into EIS qualifying companies, those companies deliver back £2 in additional revenue.
Firstly, we have spent the last few months researching the UK early-stage business funding ecosystem. Our campaign, entitled “Reigniting the UK’s entrepreneurial ecosystem” highlights the funding gaps that currently exist and makes recommendations to address these in order to boost the UK economy post-pandemic. You can read the report here - Reigniting the UK’s entrepreneurial ecosystem - EISA. In short, what we found was that pre-pandemic, early-stage businesses often struggled to raise equity finance due to market failure and ‘funding gaps,’ where credit markets failed to supply sufficient finance to fulfil demand. Covid19 has widened these gaps. The pandemic has adversely affected the supply of debt and equity finance for all firms. However young, small and innovative companies face a disproportionate burden and many were not eligible for any of the Government’s Covid-related funding schemes. The total equity gap by investment stage in 2019 suggests £768m is required at seed stage; £1.45bn at venture stage and £4.45bn for growth finance. The northern regions, East Midlands, Yorkshire and Humberside, West Midlands, and the North West, have the largest shortfalls. BETTER TOGETHER We advocate that public and private sector partnerships will be increasingly important going forward. Addressing the issues which are identified in our report will need to be done by a collaboration which the Government has the ability to kick start. It must include the private sector particularly as we seek to address regional imbalances that existed pre-Covid19 but have now been exacerbated by it. Clearly jobs are also a priority. This reports highlights that EIS and SEIS investment in an early-stage business help it to employ more people. Our survey discovered that:
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• On average, companies employed 6 additional people as a direct result of their EIS investment.
Our overriding aim is to preserve and maintain EIS and SEIS. These are schemes not only with a long and distinguished track record of delivering targeted equity funding to companies who otherwise struggle to access much needed finance but also provide extremely valuable and increasingly rare tax reliefs to individuals who are an important but often overlooked source of equity funding. As the Government considers new measures and funding programmes, EIS and SEIS must play a part alongside these and not in replacement of them. IF IT AIN’T BROKE… Secondly, Chancellor Sunak has been a long-time supporter and admirer of EIS and SEIS. As recently as December 2020, he was quoted as saying “the world leading EIS and SEIS schemes offer significant support to small businesses”. The schemes are recognised as being effective and delivering funding to companies at the appropriate and relevant stage of their development. In other words, if it ain’t broke, don’t fix it. EU STATE AID Thirdly, one of the biggest blockers to making changes to EIS and SEIS has always been EU State Aid. Both the EIS and SEIS schemes come under EU State Aid, meaning any changes to legislation the UK Government
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wishes to make to the schemes must be ratified by the EU before they become UK law. This ensured that the UK couldn’t use subsidies to give British businesses an advantage and undercut other EU countries. Under the Brexit deal, the UK will be able to set its own rules albeit we will need to create a body (think UK State Aid) to oversee its own subsidy control regime. There is still a lot of discussion taking place about what this will ultimately look like but it should give the UK slightly more control over the legislation affecting EIS and SEIS. It means that we will not need to run to Brussels every time we desire to amend the schemes in some way or form. Perhaps more importantly, it also means we won’t be subject to legislation imposed by the EU and over which we have no say. This means the shackles come off somewhat potentially which allows for quicker and far-reaching changes to take place should that be deemed to be politically and economically advantageous.
MR. BRIGHTSIDE
COVID-19
So, please talk to your clients with confidence about EIS and SEIS. Many of today’s huge companies started out a time of economic crisis (think Airbnb, Uber etc). There are exciting investment opportunities out there and I can confidently predict that a tech titan of the future will be British and EIS or SEIS funded.
Lastly, over recent months, we have seen the pandemic get worse rather than better. As I write this, as a nation, we are back in lockdown. Clearly, this has a huge, detrimental knock-on effect to the economy. Therefore is this time to be making sweeping, wider-ranging tax rises and cuts to reliefs? Probably not. Be in no doubt that time is coming and collectively we will all need to pay for the extremely
Clearly, I can’t end this article on such a downbeat note so let’s look more positively. Confidently, I predict that EIS and SEIS are in good health and not currently in the Government’s crosshairs. I say that because it’s important to remember the purpose of the schemes and who they ultimately benefit. And that is to provide early-stage businesses with access to equity funding that they would otherwise not be able to access. The Government believes that this is funding that both they and traditional funding sources are unable or unwilling to supply so they turn to private investors to bridge this gap and motivate them to do so through tax reliefs. The Government isn’t particularly interested in the investor. It is early-stage businesses which are their concern and every statistic and piece of data show very clearly that this sector is currently under-funded. It’s not in the Government’s interests to withdraw the schemes at this time and would actually be counter- productive.
About Mark Brownridge
The mood music seems to be that this Budget will be a fairly benign one but be aware of the next one!
expensive but very necessary financial support measures the Government have put in place over the last year. The pandemic may (fingers crossed) be slowly drawing to an end but the economic pain and misery are only, I fear, just beginning. So, the mood music seems to be that this Budget will be a fairly benign one but be aware of the next one!
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Mark has over twenty years’ experience in financial services and prior to becoming Director General of the EIS Association, he was Head of Research and Development at Mazars, a leading UK financial planning firm. Mark is highly qualified being a Certified Financial Planner, Chartered Financial Planner, Chartered Wealth Manager and Fellow of the Personal Finance Society and also sits on the Chartered Institute of Securities and Investments Accredited firms committee and TISA’s Distribution Policy Council. Mark’s involvement with EIS began 8 years ago and he has since championed EIS investing within a financial planning context and is extremely passionate about promoting the industry, increasing its effectiveness and ensuring the private sector continues to drive much needed funding to small companies.
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PAR EQU ITY
EIS – LOOKING TO THE FUTURE Par Equity argues the case as to why maturation of the EIS market offers increasingly attractive planning and investment opportunities for advisers and their clients
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IS has been part of an adviser’s tax efficient tool kit for the last 26 years and now, more than £2 billion is invested annually into EIS qualifying companies.
EIS is powerful medicine, armed with several appealing features to mitigate some of the risk in early-stage venturing – income tax relief, CGT deferral, loss relief, CGT exemption, business relief, and business investment relief for non-doms. From a government perspective, it makes sense. For every pound of tax relief waived via EIS, the treasury recoups more back in the form of NIC, employment tax corporation tax and of course the second order effects of stimulating SME spending on the wider economy. EIS is one of the biggest drivers of the UKs tech scene, propelling innovation and improving productivity across every sector it touches. EIS Fund Managers have professionalised and developed in line with the maturation and growth of EIS. There is a new breed of manager today, compared with 10 years ago. Historically, VCs had been packed full of accountants, deal-doers, rather than having had their own experience in founding, growing and selling companies. That’s changed. Venture capital managers nowadays are wrapping experience and networks around their portfolio companies and it’s
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having a huge impact on returns for clients. Take Par Equity, for example, our returns to investors are sitting at 3.8x money and a 27% IRR across 125 realised investment rounds into tech companies, before any EIS tax relief. DELIVERING POSITIVE CHANGE 2020 will be remembered as a year of hardship, a year of transition and also a year of opportunity. It has heralded a range of new words into common parlance - lockdown and furlough - and our kitchen tables have never seen so much of us, our laptops and never-ending debates about T-cells and government policy! Covid-19 has also hit industry hard, particularly hospitality, travel and entertainment. But we have also seen positive change too. Consider the record-breaking speed at which we’ve delivered new vaccines and what that might hold for other diseases beyond Covid-19, or how the nation ‘walked with’ Captain Sir Tom Moore to raise more than £32m for the NHS. In a similar vein, Par’s EIS investment Current Health has empowered hospitals and supported multiple vaccination trials of tens of thousands of participants around the world with its remote patient monitoring devices, whilst Mallzee (another Par portfolio company) has sold over 120,000
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PAR EQU ITY
Februar y 2021
boxes of clothes, each box supporting a factory worker’s family in Bangladesh for a week through Mallzee’s charity partner SAJIDA. HOW EIS CAN HELP BEYOND COVID-19 There are two major challenges for the UK economy moving forward – unemployment and national debt. Unemployment in the UK is forecast to reach 2.6 million by the middle of 2021. National debt now sits at 101% of GDP, its highest level since the early 1960s. With Brexit now in full swing, it is hard to imagine where we go from here, but EIS is part of the solution. Structural unemployment on this scale needs joined up government thinking – from education reform and widescale training programmes, to the adaptation of employment law and the much-needed investment stimulation. EIS is very much part of the scope to increase investment stimulation and, in turn job, creation. Take Par’s own portfolio of 40 companies, for example, which currently employ 793 people in total. This has supported an additional 100 jobs since March, and we’re forecasting it to support a further 400 jobs during 2021. EIS turbo charges the SME landscape, the backbone of the UK, and we’re not alone in using tax relief to stimulate early-stage venture capital and business angel activities – 9 of the EU-15 have one or more investor tax relief measures in place. As such, it’s common practice to promote innovation in this way. With a growing consensus to raise capital gains tax rates, and possibly income tax too, government can channel more money into SMEs, and the wider economy, through efficient investment tools like EIS. DEVELOPING EIS FURTHER Par Equity is working with the EIS Association on its campaign “Re-igniting the UK’s entrepreneurial ecosystem” - a piece of research supported by Beauhurst and analysing 18,000 companies. The campaign seeks to identify improvements to EIS, beyond the headline tax relief, to stimulate a post-Covid, post Brexit, economy. One possible measure, lobbied by Par Equity, is to increase the carry back facility from 1 year to 2 years. We believe that his small tweak to the rules would improve the EIS
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funding ecosystem and, in turn, increase the use of EIS to support young companies. For financial intermediaries it would provide more time to advise their clients on tax efficient investment opportunities. For investors it would improve the diversification as their investments would be spread across more companies. Finally, for entrepreneurs it would remove the seasonality to the deployment of EIS funding and potentially also increase the amount of funding available. Par Equity is undertaking an adviser survey in conjunction with GBI Magazine on this topic and will then be making a submission to the EIS Association. If you are reading this and would like to contribute, please contact Andrew Noble at Par at andrew.noble@parequity.com Our goal is to make sure we build a sustainable investment product for you and your clients, and we look forward to working with many of the readers of GBI Magazine in the years to come.
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OXFORD CAPITAL
CAPITALISING ON THE
GROWTH
IN EARLY STAGE COMPANIES As the tax year-end approaches, Richard Roberts, Director, Investor Relations, Oxford Capital, reminds advisers of the benefits of EIS investments as part of their clients’ balanced portfolios
GROWTH OF EARLY STAGE COMPANIES IN THE CURRENT ENVIRONMENT As we approach the end of this tax year, it may be time to start talking to your clients about diversifying their portfolios and consider alternative investment opportunities. At Oxford Capital, we are passionate about investing in early stage technology companies in sectors which the UK is considered a world leader such as fintech, online marketplaces and digital health. While 2020 was a challenging year as start-up businesses navigated the challenges of the pandemic, we have found that it has really concentrated the minds of founders. It has brought out the best in them as they have streamlined and improved their businesses to cope with and take advantage of the situation. A number of our companies have also capitalised on opportunities arising from the Covid-19 crisis, particularly those that have harnessed technology to meet the changing needs of consumers. Our portfolio company, Moneybox (saving and investing app) has seen significant customer growth and an average of £100m was deposited by customers every month in 2020. In July 2020, it closed a £30m series C fundraise. In addition, Curve (the banking platform that combines multiple cards and accounts into
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one card), announced this month that it had closed a $95M series C fundraise which it will use to launch the business into the US and expand its reach within Europe. HOW IS RISK MANAGED IN AN EIS PORTFOLIO? For your clients considering a venture capital investment, it is worth reminding them that EIS investing comes with a high level of risk, particularly because investments in unquoted shares are illiquid and can be hard to value. Although when executed well, venture capital strategies offer the potential for high returns. In addition, only a fraction of VC-backed businesses will go on to be sold at a significant profit, generating nearly all of the investor’s total returns, while some companies will grow more slowly than expected, generating only modest gains or breaking even. A high proportion of companies will fail resulting in a loss for investors but with the right choice of alternative asset manager, there are ways to mitigate some of that risk for investors: Diversification is crucial, and not just based on the number of underlying companies, although that is important. You also have to consider the sector, the stage of
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OXFORD CAPITAL
investment, and the maturity of the companies. We believe that the right level of diversification for venture capital portfolios utilising EIS is between 8-12 companies. Timing is also key. At the initial funding round, we will typically invest a small amount of capital, which will translate to approximately 5% of a client’s portfolio. We will then work with that company and typically take a seat on the board to help them grow and develop. If the business meets certain metrics and targets, we will then invest a greater amount, representing say 10%. There is really no better due diligence than working closely with a company for 12-18 months. And if it continues to perform well, we may embark on a third funding round (increasing the holding up to a maximum of 20% allocation). We also co-invest with other large institutional investors which helps to mitigate the financing risk in the EIS portfolio, and also adds further experience and expertise. Often strategic investors will be involved in the later funding rounds, which adds another potential route to exit. Patience – realistically, clients should expect the majority of investments within their EIS portfolio to exit within five to seven years (although it may take longer), because it’s important to allow some time for the underlying companies to grow, and to not sell the strong performers too soon. WHY EIS AS A VEHICLE FOR VENTURE CAPITAL? Through investing in an EIS portfolio, investors can claim back 30% of the amount invested into EIS-qualifying companies against income tax that they have paid, either in the year of investment or carried back against the previous year. Relief can be claimed on EIS investments totalling up to £2m in any given tax year, providing certain conditions are met. There is also the added advantage of loss relief. This means that the downside risk is mitigated at the marginal rate of
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Februar y 2021
Through investing in an EIS portfolio, investors can claim back 30% of the amount invested into EIS-qualifying companies against income tax that they have paid, either in the year of investment or carried back against the previous year
the investor’s income tax rate, whilst the upside potential can be significant. Capital gains can also be deferred from the sale of other assets, in part or in full, by investing an amount up to the value of the gain into EIS qualifying companies. Gains that occurred up to three years before, or one year after, the date of the EIS investment can be deferred. The gain is re-crystallised when the EIS is subsequently sold and CGT becomes payable at the rates prevailing at that time, unless rolled over into another EIS investment. These factors make EIS investing a strong proposition. Richard Roberts, Director, Investor Relations Richard has worked in venture capital for over 12 years and is a member of the Investment Committee at Oxford Capital. His experience lies in strategic and financing transactions for UK SMEs within the TMT, property and clean-tech sectors. Richard’s early career was spent at HW Fisher, a UK Top 30 Chartered Accountants firm, providing advisory services in the wealth management and property divisions. Richard is a Chartered Fellow of the Chartered Institute for Securities & Investment, and the Institute of Consulting. He currently sits on several portfolio company boards.
17
M AGAZINE
GBI OPEN OFFERS A selection of tax efficient opportunities currently open for investment 18
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Open Offers
EIS
SEIS
Open
Open
Evergreen
Evergreen
Amount to be Raised:
Uncapped
Nova Cofoundery SEIS & EIS Fund Members of the Nova team have spent the last 10 years developing their cofoundery model which we believe addresses 5 of the most common mistakes made by startups. The Fund is intended for those UK tax paying individuals:
Minimum Investment:
£10,000
• Seeking a diversified exposure in a highly concentrated asset class to knowledge intensive companies in the UK • With income tax liability in the preceding or current tax years • With large capital gains to defer or mitigate • Who look to benefit from IHT relief
T. 0151 318 0761 E. alistair@novagrowthcapital.co.uk www.novagrowthcapital.co.uk
The minimum individual investment in The Fund is £10,000. At the Investment Manager's discretion, smaller individual investments may be accepted, however, this is not guaranteed. The selection of investee companies and the subsequent allocation of investor’s subscriptions to the investee companies are made at the discretion of the Investment Manager with guidance from the Investment Advisor. Highlights An engaged hands-on approach from an experienced startup team • Free of manager fees to the investor for subscriptions received via a financial adviser, facilitating 100% deployment of investor funds and aiming to ensure maximum tax efficiency for the investor • All SEIS and EIS tax advantages applicable, depending on personal circumstances and subject to HMRC approval • Target return of 172p for every 100p invested (Not including EIS or SEIS reliefs) • Performance fee aligns our interests with the investors
EIS
SEIS
Open
Close
Now
Multiple
Amount to be Raised: Evergreen
Minimum Investment: £10,000
Start-Up Series Fund The Start-Up Series Fund is an evergreen EIS & SEIS service. Managed as an Alternative Investment Fund by Amersham Investment Management Limited, authorised and regulated by the FCA. The service is designed for eligible subscribers to be invested in selected winners of the Start-Up Series, a monthly competition organised by Worth Capital Limited and promoted by smallbusiness.co.uk. The Fund invests in qualifying B2C or B2B companies with innovative products or services that can create new consumer behaviours in growth markets, with teams that demonstrate compelling marketing & communication skills and with a clear credible route to exit. • EIS & SEIS investments – choose EIS, SEIS or both • Businesses selected by real world, commercial entrepreneurs with deep brand, marketing, retail & innovation expertise – Worth Capital • A unique approach to UK EIS & SEIS fund investing – a monthly competition which has attracted almost 3,000 applications to date
T. 07768571271 E. pauls@worthcapital.uk worthcapital.uk
• Ongoing oversight from experienced investor directors – skilled in helping accelerate growth & reducing risk • Investments in ‘mini-portfolios’ of typically 3 or 4 businesses • Investments qualifying for attractive EIS & SEIS tax reliefs Any investment in the Start-Up Series Fund places capital at risk of total loss and will not be readily realisable. Tax treatment depends on individual circumstances and is subject to change. We recommend retail investors take professional advice before investing.
EIS Open
1st March 2020
Close
Evergreen
Amount to be Raised:
Seeking to raise up to £30 million per annum
Minimum Investment: £25k
T. 0161 641 9475 E. ventures@praetura.co.uk www.praeturaventures.com
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Praetura EIS Growth Fund The Praetura EIS Growth Fund will provide access to a unique selection of innovative growth companies that have an established proof-of-concept and commercial viability. It is intended for investors who want to achieve capital growth by investing in early-stage, unquoted companies which have the potential to increase in value significantly. Praetura are an active fund manager and work with driven management teams at the foundational stages of their business. Each of their portfolio businesses provide access to recurring, high margin revenue streams and have the opportunity for operational leverage once scaled. Areas of focus include; Creative, Digital & Tech, Financial, Professional & Business Services, Energy & Environment, Advanced Manufacturing and Health & Life Sciences. As an ‘Evergreen’ fund, the Praetura EIS Growth Fund will have two ‘soft closes’ per annum, and the next soft close is 31st March 2021. The Fund will invest into c. 8-10 promising young businesses and expect to fully deploy the capital within 6 months of each relevant close date. The fund is targeting a minimum return profile of 2x return on capital. This, combined with the tax reliefs available and Praetura's track record, offers investors an attractive investment opportunity.
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EIS Open
Close
17 November 2020
n/a
Amount to be Raised:
n/a
Minimum Investment:
£50,000
Octopus Ventures EIS Service A new service from Octopus supported by Europe’s largest venture capital firm. We created the Octopus Ventures EIS Service to give investors the opportunity to invest in 10-15 earlystage businesses with high growth potential (each targeting 10x growth), handpicked and managed by our expert investment teams. The Octopus Ventures EIS Service could be suitable for those who want to target high growth from a long term investment, want to diversify their portfolio and those who want to directly own shares in exciting earlystage companies, providing they are comfortable with the risks of early stage investing. We believe that there are three stages to achieving capital growth from investments in early-stage businesses, which our specialist in house investment teams are experienced at delivering: 1. Access to investment opportunities that have the potential to achieve high growth. 2. Effective nurturing and support of a business as it matures.
T. 0800 316 2067 E. support@octopusinvestments.com
octopusinvestments.com
3. The ability to manage a successful exit. For someone investing on their own, each of these stages would pose a challenge. We are fortunate that through 20 years of investing in smaller companies, we have established a reputation that means many talented entrepreneurs approach us with their ideas when they are looking for a first investment into their business. We also have access to an exciting range of follow-on investment opportunities in smaller companies seeking additional funding for further expansion. Key risks to keep in mind • The value of an EIS investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. • Tax treatment depends on individual circumstances and may change in the future. • Tax reliefs depend on the portfolio companies maintaining their EIS-qualifying status. • The share price of EIS companies may be volatile and they may be hard to sell. EIS investments are not suitable for everyone. We do not offer investment or tax advice. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. We record telephone calls. Issued: November 2020. CAM010471.
VCT Open
21 October 2020
Close
20 October 2021
Amount to be Raised: £120 million
Minimum Investment: £3,000
Octopus Titan VCT Since 2007, Octopus Titan VCT has earned a reputation for backing pioneering entrepreneurs. Octopus Titan VCT is the largest VCT in the market, with over £900 million of funds under management1 and a diverse portfolio of around 80 companies. Titan has a proud history of backing some of the UK’s most successful entrepreneurs, having made early investments in Zoopla Property Group, Secret Escapes and graze.com, among many others, and continues to provide backing to promising companies with the potential to become household names. Octopus Ventures is the team that manages the investments in Titan, investing mainly in UK-based techenabled companies with global ambitions and the potential to grow quickly. The team is one of the largest in Europe, and our network reaches from China to Silicon Valley from our base in London and office in New York. Octopus Ventures backs pioneering entrepreneurs who are changing the world, focusing predominantly on four key areas: Future of Health, Future of Money, Deep Tech and Consumer.
T. 0800 316 2067 E. support@octopusinvestments.com
octopusinvestments.com
Having deep expertise in these key areas helps attract the best entrepreneurs, who tend to have a preference for investors who specialise in their sector. It also allows us to find the best opportunities in each area more efficiently while continuing to build specialist skills and expertise. Key risks to keep in mind • The value of a VCT investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. • Tax treatment depends on individual circumstances and may change in the future. • Tax reliefs depend on the VCT maintaining its VCT-qualifying status. • VCT shares are by their nature high risk, their share price may be volatile and they may be hard to sell. Octopus Investments, 30 June 2020
1
VCT investments are not suitable for everyone. We do not offer investment or tax advice. This advertisement is not a prospectus. Investors should only subscribe for shares based on information in the prospectus and Key Information Document (KID), which can be obtained from octopusinvestments.com. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. We record telephone calls. Issued: November 2020. CAM010472.
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Open Offers
“The shift in the way many of us work, live, learn and earn has precipitated investment interest in this [EIS] Fund, which specifically focusses on these areas and has done for many years now.� MICAP, November 2020 84 (score out of 100) MJ Hudson Allenbridge, June 2019 Visit www.scaleupfund.co.uk for more information, to download the IM and application form for 2020/21
EXISTING EIS PORTFOLIO
For more information, please contact: nexusinvestments@nexusgroup.co.uk or call +44 (0)207 451 7050
@NexusInvest
scaleupfund.co.uk nivl.co.uk
Nexus Investments refers to Nexus Investment Management Limited (NIML) and Nexus Investment Ventures Limited (NIVL). Nexus Investment Ventures Limited and Nexus Investment Management Limited registered in England with registered numbers 7539942 and 10927854. Nexus Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN 796814). Member of BVCA and EISA.
BPR Open
Close
2007
n/a
Amount to be Raised:
n/a
Minimum Investment:
£25,000
Octopus Inheritance Tax Service Since 2007, the Octopus Inheritance Tax Service has given investors the opportunity to invest in the shares of companies making a positive contribution to the UK’s economic growth. The companies are unquoted, which means their shares do not trade on any stock exchange. We select companies that we expect to qualify for Business Property Relief (BPR). This is a government approved relief from inheritance tax. Provided the investment has been held for at least two years at the time of death, it can be left to their beneficiaries free of inheritance tax. Octopus Inheritance Tax Service is a Discretionary Fund Management Service. The service aims to deliver steady investment growth of 3% per year on average over the lifetime of an investment. The service is flexible enough to adapt to the investors needs, should their circumstances change in later life, subject to liquidity. Key risks to keep in mind
T. 0800 316 2067 E. support@octopusinvestments.com
octopusinvestments.com
• The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. • Tax treatment depends on individual circumstances and could change in the future. • Tax relief depends on portfolio companies maintaining their qualifying status. • The shares of unquoted companies could fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell. BPR-qualifying investments are not suitable for everyone. Any recommendation should be based on a holistic review of your client's financial situation, objectives and needs. We do not offer investment or tax advice. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. We record telephone calls. Issued: July 2020. CAM010110.
EIS Open
March 2012
Close
Evergreen
Amount to be Raised: £10m - £25m per annum
Minimum Investment: £20,000
T. 0131 556 0044 E. pauline.cassie@parequity.com www.parequity.com
Par EIS Fund Recognised as "highly commended" in the 2020 EIS Association Awards for Best EIS Fund Manager. Across 22 realisations made to date, Par is demonstrating strong and consistent returns to investors. Par Equity is a leading EIS fund manager, investing in innovative, high growth technology businesses across the north of the UK. We harness the expertise and contacts of our Par Investor Network and wider contacts to create a distinctive, operationally focused investment model that benefits both investors and entrepreneurs. The Fund is focused on innovative companies. These are companies which are developing new technologies for sale or using advances in technology to disrupt existing markets. Par Equity has invested in companies operating in areas such as software, public health, e-commerce, social media, consumer electronics, photonics, technical textiles and medical devices. The unifying characteristic of Par Equity’s portfolio is therefore the importance of innovative technologies to the investment case underpinning each commitment of capital. In building the investment case, Par Equity draws on the experience, expertise and contacts of the Investment Team, but also the resources of individuals within the Par Investor Network. In this way, Par Equity can make informed decisions across a range of sectors, providing the potential for Investors, over a series of Subscriptions, to gain exposure to a diverse range of growth-oriented investments. Strategy for the Fund: • Focused on early stage technology companies with high quality management teams addressing global markets • Co-investing with experienced angel investors who add value to portfolio companies at each stage through to exit • Target portfolio of 7 - 8 investments • Target deployment within 12 months • Expected holding period of 5 - 7 years with a benchmark IRR of 15% Experience and track record of the Fund Manager: • 85+ years experience in EIS. • 247 EIS qualifying investments • 61 companies backed • £84m invested by Par leveraging a further £135m • 9.8 months • 96 days EIS3 • 22 realisations • 3.8x money multiple (before tax relief) • 27% IRR • 4.5 years average holding period.
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Open Offers
EIS Open
Close
30 November 2018
Evergreen
(monthly closes), next closes
31 January 2021 Amount to be Raised:
Nexus Investments’ EIS Scale-Up Fund A leading FCA Authorised sector-specialist EIS Scale-Up Fund For 2020/21 that helps advisors & investors deploy targeted, specialist risk capital, empowering growth and productivity at this important time. We build each subscriber a curated portfolio of 8-10+ exciting, early-stage, EIS qualifying, businesses scaling up in the Data, Digital, Educational and Health sectors.
£10,000,000 (£4,300,000 raised to date)
Nexus is owned by entrepreneur and financier, Harry Hyman, who in 1996 founded, and is still managing director of Primary Health Properties Plc, a FTSE-250 listed Healthcare Real Estate Investment Trust with over £2.4bn AUM itself.
Minimum Investment: £25,000
Nexus also founded and runs HealthInvestor magazine, Education Investor and now Nutrition Investor, which are specialist B2B information, news and events titles for each respective sector. The only UK EIS specialist: – part of a wider corporate group historically managing >£2.4bn AUM – with 27 years group history (including a FTSE-250 Healthcare REIT)
T. 0207 104 2059 E. nexusinvestments@nexusgroup.co.uk www.scaleupfund.co.uk www.nivl.co.uk
SEIS Open
Close
June 2019
Evergreen
Amount to be Raised: £3m Minimum Investment: £10,000
– solely Scale-Up, and since inception, solely Data, Digital, EdTech & Health – with exciting track record of Venture Investments since 2014 – with meaningful partial exits (+84% first-time score by MJ Hudson Allenbridge)
Jenson SEIS Fund Pioneer of SEIS investments, Jenson have been investing in early stage companies since 2012 with 108 investments. The Jenson SEIS Fund aims to target new innovative companies which are developing disruptive technologies with established plans and management teams, demonstrated growth potential with strong commercial opportunities with a planned exit strategy. The Fund is a generalist fund, thereby the sector focus is agnostic and the type of businesses and opportunities can be anything that is SEIS compliant (typically small early stage companies in non-capital intensive sectors). Jenson has a strong pipeline of investment opportunities. Highlights
T. 020 7788 7539 E. invest@jensonfunding.com www.jensonfundingpartners.com
EIS Open
July 2019
Close
Evergreen
Amount to be Raised: £5m Minimum Investment: £10,000
T. 020 7788 7539 E. invest@jensonfunding.com www.jensonfundingpartners.com
• Target Size - £3 million in respect of the 2020/2021 tranche • Diversified Portfolio Size of 8 to 12 SEIS companies • Eight exits to date with a range of multiple returns from x.5 to potential of x12.
Jenson EIS Fund The Jenson EIS Fund has a mandate to focus on long-term capital growth and enables private investors to invest in a range of committed and ambitious entrepreneurs and their early stage growing companies. The Jenson EIS Fund predominantly facilitates syndicated follow-on funding to its existing portfolio, external opportunities are also considered allowing us to benchmark against our existing opportunities. Investing in our portfolio allows us to support management teams that we have already worked along side. All companies will be small unquoted UK companies that qualify under the EIS tax rules. The Fund is a generalist fund, thereby the sector focus is agnostic, and the type of businesses and opportunities can be anything that is EIS compliant (typically small early stage companies in non-capital intensive sectors). Highlights • Follow-on funding for 19 of our existing portfolio companies. • Syndicated investment strategy releasing £3 for every £1 of Jenson Investment. • Investee Company Voneus received £10m investment (potentially increasing to £30m) from Macquarie Partners.
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23
VCT Open
02/10/2020
Close
30/09/2021
Amount to be Raised:
£20m Ordinary shares + £10m over- allotment facility Minimum Investment: £3,000
Blackfinch Spring VCT Growth-Stage Investing The Blackfinch Spring VCT invests in technology-enabled firms at growth stage, bringing a higher chance of success. We invest in firms that have already raised funding, gained traction and aim to accelerate the scale-up process.
Tech-Enabled Firms We’re focused on companies using the Internet, mobile devices and social media to offer better products and services. Exposure to different firms and sectors helps create portfolio diversification.
Return Targets We target firms offering the potential for higher returns at exit. They need to show they have revenue and customers, and are capable of disrupting large, growing markets.
Tax Benefits • Up to 30% Income Tax relief (minimum holding period five years) • Gains exempt from Capital Gains Tax (CGT) when investors sell shares T. 01452 717070 E. enquiries@blackfinch.com www.blackfinch.com
• No Income Tax on dividends
Discounts • 1.5% per share for new applications received by 3pm, 31 January 2021 • 1% per share for new applications received after then and before 3pm, 5 April 2021 • 1% per share for existing investors up until 3pm, 5 April 2021 Capital at risk.
IHT Open
Close
Evergreen
N/A
Amount to be Raised:
N/A
Minimum Investment:
£25,000
Adapt IHT Portfolios Meeting the Inheritance Tax Challenge Inheritance Tax (IHT) legislation, set against property values, means this tax remains a challenge for many. Our IHT solution uses Business Relief for a swifter route to IHT exemption after just two years (and if held at death).
Diverse Opportunities Three investee firms provide access to a wide range of opportunities: • Lyell Trading: property development finance • Sedgwick Trading: renewables investment • Henslow Trading: asset-backed finance
Choice Each client can choose from four model portfolios. This means each can find what’s right for them in terms of sustainable investing, their objectives and risk profile. T. 01452 717070 E. enquiries@blackfinch.com www.blackfinch.com
• Ethical: focus mainly on renewables and low carbon projects, target return of 3%* p.a. • Balanced: focus on capital preservation, target return of 4%* p.a. • Balanced Growth: focus on capital preservation with growth, target return 4.5%* p.a. • Growth: focus on growth, target return of 5%+* p.a. *All target returns net of costs and charges
Value We only take an annual management fee of 0.5% +VAT after we have achieved the minimum target return on the model portfolio a client selects.
Control Clients retain access to and control of capital, enabling withdrawals if their situation changes. They can also take regular payments or leave capital invested. Capital at risk.
24
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Open Offers
THE NATURAL CHOICE FOR SEED EIS
FROM THE GOVERNMENT YOU GET
WWW.NOVAGROWTHCAPITAL .CO.U K
WWW.NOVAGROWTHCAPITAL .CO.UK
The most generous tax reliefs of all: 50% Income Tax Relief + Capital Gains Tax benef its + Loss Relief.
THINK YL T N E R E F F I D ABOUT SEED EIS FROM THE NOVA GROUP YOU GET Experience: backing start-up companies since 2008. Proven performance: 36.5% year on year growth since 2008. Call Alistair Marsden on 07776 796 166
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Unique depth of expert support for our portfolio companies. Reassuring diversif ication: aiming to invest in at least 20 companies each year.
25
EIS Open
Close
Evergreen
N/A
Amount to be Raised:
N/A
Minimum Investment:
£10,000 advised £50,000 non-advised
Blackfinch Ventures EIS Portfolios EIS Provider The Blackfinch Ventures EIS Portfolios are our open offering as a provider of Enterprise Investment Scheme (EIS) services. We have a strong track record in EIS, having previously raised funding across sectors. We’re passionate about supporting new firms as they grow.
Tech Focus We invest in forward-thinking new technology companies. Firms operate across sectors, with offerings based on ground-breaking new concepts, using highly specialised technology. With the potential to change the way we live and work, they’re set to make an impact in global markets.
Return Targets We target higher returns of 3-5x on investment, focused on successful outcomes for clients and companies. We identify firms early in their life and invest before they take off. Risk management is key to our strategy.
Tax Benefits • Up to 30% Income Tax relief T. 01452 717070 E. enquiries@blackfinch.com www.blackfinch.com
• 100% Inheritance Tax (IHT) exemption on qualifying investments after two years (and if held at death) • Capital Gains Tax (CGT) deferral relief (up to three years prior to investment and up to one year in advance) • Growth free of CGT (if Income Tax Relief has been claimed) • Offsetting of capital losses up to 45% • Carry back to previous tax year (for Income Tax relief) Capital at risk.
EIS Open
Evergreen
Close
Evergreen
Amount to be Raised: £10m Minimum Investment: £25,000
E. invest@o2h.com www.o2hventures.com
The o2h human health EIS knowledge intensive fund o2h ventures launched the o2h human health EIS knowledge intensive fund as the first HMRC approved knowledge intensive fund. The investment focus of the HMRC approved knowledge intensive fund will be therapeutic drug opportunities or technologies that enable drug discovery with an emphasis on Artificial Intelligence (AI). The geographic scope shall be UK wide, following on from the success of the ‘o2h human health EIS Fund. Knowledge intensive investing offers investors an opportunity to take advantage of the predictability of the tax year, from which they are able to claim relief. To date, investors in EIS funds claim relief when the funds are deployed into a business. However, in the new HMRC approved knowledge intensive funds, relief is dated when the investment into the fund is made (with carry back options depending on individual circumstances). The biotech sector is one of the leading sectors in the UK economy. The large pharma companies now rely on the small innovative biotechs for new ideas in disease areas such as cancer, genomics, anti-ageing and neurosciences amongst others which has led to higher potential exit valuations. The fund will widen the community of investors that will help expand early stage research in the UK. The o2h team are leaders in the biotech community and have been actively involved as investors, holding various board/industry positions as well as being engaged in grassroots scientific activity for over 20 years. o2h operate from their proprietary 2.7 acre o2h SciTech Park where they are developing a unique model for incubating small life science companies. Key Highlights The first HMRC approved Knowledge intensive fund • Portfolio Diversification - Investment in 5-7 portfolio companies • o2h Ventures, CEO & Fund Manager - Sunil Shah has been awarded UKBAA Angel of the year 2019 award as well as the OBN Special Recognition Award for his exemplary contribution in lifesciences industry • Closing Date – Bi annually (April and September)
26
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Open Offers
EIS Open
Close
Evergreen
Evergreen
Amount to be Raised:
N/A
Minimum Investment:
£20,000.00
Newable EIS Scale Up Fund 3 The Fund seeks to leverage Newable’s unique corporate infrastructure to invest in knowledge intensive companies at the point of commerialisation and once a company has proven the concept through early-stage revenues. The investments are supported by Newable's wider platform, providing serviced offices, advisory services, and lending solutions. Newable also benefits from the expertise of circa 300 professionals, the Newable EIS Scale-Up Fund 3 has a unique eco-system from which to originate, undertake due diligence, execute, support, monitor and ultimately exit investments. The Fund aims to provide investors with a diversified portfolio of 7-10 knowledge intensive companies, offering investors exposure to an exciting asset class without the need to stock pick and commit management time. Newable is independently recognised as one of the UK’s leading investment networks and draws on a 36 year track record as well as long term partnerships with the U.K. government and business community.
T. 0785 091 5378 E. sanjeev.gordhan@newable.co.uk www.newable.co.uk
Risk is mitigated through a selection methodology and due diligence built around Newable’s +300 strong investor group as well as by leveraging the Enterprise Investment Scheme for early stage investments. Highlights • Newable can provide strong support at the scale-up growth stage, drawing on broader group resources across a range of disciplines including grant writing services, export services and innovation advice. • Newable curates one of the most comprehensive and sophisticated deal flow eco-systems in earlystage investing. This eco-system yields around 1,500 investment opportunities every year. • The Newable Ventures Investment Advisory committee has over 110 years of combined investment experience with a track record of making successful investments across the Innovation and Technology space. Recent examples include: • Atelerix: Invested Jan 2018 returning a 2.07x uplift in share price • Cognism: Invested in March 2018 returning a 3.42x uplift in share price • Hummingbird Technologies Invested in March 2018 returning a 2.25x uplift in share price
EIS Open
Evergreen
SEIS Close
Evergreen
Amount to be Raised: £5m Minimum Investment: £15,000
Oxford Technology Combined SEIS and EIS Fund - “The Start-up Fund” Oxford Technology invests in high risk, high reward technology start-ups, in general within an hour’s drive of Oxford, and has been doing this since 1983. The latest fund, OT(S)EIS made its first investment in 2012. By 31st December 2020, OT(S)EIS had completed 149 investments in 42 companies. Things continue to go well and in the most recent quarter, the tax free gain on the portfolio increased from £10.59m at the end of Q3 to £11.80m at the end of Q4. The figures for the fund as a whole since its inception are as follows:
T. 01865 784466 E. info@oxfordtechnology.com www.oxfordtechnology.com
Gross amount invested by OT(S)EIS:
£ 7.91m
Cash back to investors via tax reliefs (1):
£ 2.98m
Net cost of these investments after tax reliefs (2):
£ 4.93m
Cash back from exits (3):
£ 0.24m
Fair value of remaining portfolio (4):
£ 16.73m
Total value: £ 19.95m Tax free gain (on paper only so far):
£ 11.80m
After tax losses on the three failures:
£ 0.14m
*OT(S)EIS investors who made an SEIS investment in Animal Dynamics, an Oxford University spinout at 14p per share (7p after SEIS tax relief) in Jun 2015, had the opportunity to exit in March 2019 at 97p per share (so 14x the after tax share price). About 50% of the shareholders opted to sell with 50% opting to remain – the company is doing very well. OT(S)EIS remains open for investment at any time. We average about one or two new investments per quarter, and investors in the fund receive their pro-rata share of these. The latest quarterly report, with a page of information on each investment is downloadable from www.oxfordtechnology.com. At 10am on the first Thursday of every month, Oxford Technology holds a Zoom meeting at which 3-4 of its existing investee companies which are seeking expansion capital present, enabling investors to make direct EIS investments; sign up to attend via the website.
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27
EIS Open
Close
Evergreen
Amount to be Raised:
N/A
Minimum Investment:
£100,000
Mercia BIR fund This Business Investment Relief (BIR) wrapper enables Resident Non-Dom (RND) investors the opportunity to very tax-efficiently invest in Mercia EIS Fund. RND investors can use BIR to bring off-shore capital into the UK potentially without taxation, in addition to the generous EIS benefits. Mercia’s EIS Funds have an investment-led venture capital strategy, investing nationally with a focus on the underserved regions; specialising in the identification, creation, funding and scaling of innovative technology businesses with high growth potential, creating a strong investment proposition. Mercia has an Investment Team of industry specialists with venture capital expertise, working extensively with portfolio companies to scale each business with the aim of ultimately delivering shareholder returns. Mercia can fund companies with different pools of capital, initially via its own EIS Funds or other thirdparty funds, and then selectively using Mercia’s proprietary capital. Mercia is therefore able to provide a ‘Complete Capital Solution’ for entrepreneurs and small companies, starting from seed rounds of £100,000, larger rounds of up to £2.0million, and building to funding rounds of £10.0million. Highlights
T. 0330 223 1430 E. enquiries@merciatech.co.uk www.merciatech.co.uk
Sustained Deal Flow - the consistency in both value and volume of Mercia's deal flow is hugely supported by deep relationships and networks in each region. Diversified Portfolio - consisting of approximately 15 EIS qualifying technology companies. Advance Assurance - will be sought from the HMRC for each investment. Proactive, specialist asset manager providing capital to regional SMEs (96% invested outside of London). Eight offices across the UK with 90 investment staff and 19 university partnerships. The Mercia Group has a substantial track record of delivering realisations from early-stage technology companies. This EIS fund is managed by a team that has seeded unicorns, and delivered some very high multiple returns for both EIS investors (Clear Review 8x Oct 2020, Native Antigen Company 8.6x July 2020) and Mercia’s other venture capital funds (Allinea 26x Dec 2016, BluePrism 104x July 2019).
EIS Open
Close
Evergreen
Amount to be Raised:
N/A
Minimum Investment:
£25,000
Mercia EIS fund Mercia’s EIS Funds have an investment-led venture capital strategy, investing nationally with a focus on the underserved regions; specialising in the identification, creation, funding and scaling of innovative technology businesses with high growth potential, creating a strong investment proposition. Mercia has an Investment Team of industry specialists with venture capital expertise, working extensively with portfolio companies to scale each business with the aim of ultimately delivering shareholder returns. Mercia can fund companies with different pools of capital, initially via its own EIS Funds or other thirdparty funds, and then selectively using Mercia’s proprietary capital. Mercia is therefore able to provide a ‘Complete Capital Solution’ for entrepreneurs and small companies, starting from seed rounds of £100,000, larger rounds of up to £2.0million, and building to funding rounds of £10.0million. Highlights Sustained Deal Flow - the consistency in both value and volume of Mercia's deal flow is hugely supported by deep relationships and networks in each region. Diversified Portfolio - consisting of approximately 15 EIS qualifying technology companies. Advance Assurance - will be sought from the HMRC for each investment.
T. 0330 223 1430 E. enquiries@merciatech.co.uk www.merciatech.co.uk
Proactive, specialist asset manager providing capital to regional SMEs (96% invested outside of London). Eight offices across the UK with 90 investment staff and 19 university partnerships. The Mercia Group has a substantial track record of delivering realisations from early-stage technology companies. This EIS fund is managed by a team that has seeded unicorns, and delivered some very high multiple returns for both EIS investors (Clear Review 8x Oct 2020, Native Antigen Company 8.6x July 2020) and Mercia’s other venture capital funds (Allinea 26x Dec 2016, BluePrism 104x July 2019).
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I FAmagazine.com
Open Offers
EIS
SEIS
Open
Close
April 2017
Evergreen
Amount to be Raised:
Up to £25,000,000
Minimum Investment: £10,000
T. 020 7071 3945 E. enquiries@growthinvest.com www.growthinvest.com
GrowthInvest Portfolio Service The GrowthInvest Portfolio Service is a discretionary managed EIS & SEIS portfolio service that leverages the experience and expertise of the GrowthInvest investment team to select a diversified portfolio of some of the most promising companies that are brought to the platform, and the Investment Committee. Clients can invest in three different strategies in the GrowthInvest Portfolio Service. The first will target investee companies which qualify for SEIS reliefs only; these companies tend to be the highest risk that are often developing their minimum viable product and will be pre-revenue businesses. The second strategy will target investee companies which qualify for EIS reliefs only, i.e. those businesses that are already trading and require equity capital to expand their operations. The third strategy is a mixed investment policy which will target investee companies which qualify for both SEIS and EIS relief and offering a more moderate level of risk. The GrowthInvest Portfolio Service aims to return to clients twice the initial invested amount (not including tax reliefs) and is aiming to exit investments and return capital three to seven years after the initial investment into the Portfolio Service. GrowthInvest is an independent platform, which provides whole-of-market access to alternative and tax efficient investments for the clients of financial advisers, wealth managers and investors.
EIS
SEIS
Open
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Evergreen
Evergreen
Amount to be Raised: N/A Minimum Investment: £5,000
GrowthInvest - The Tax Efficient Platform for Advisers GrowthInvest simplifies research, investment and reporting on alternative and tax-efficient assets. Through our smart technology platform, we serve wealth managers, financial advisers, and their clients. Our core service offers: • A market-leading range of investment offers including EIS, SEIS, VCT, IHT and other alternative investments. • Reporting on all alternative assets in one online secure portal (including the onboarding of historical assets) • An extensive library of educational materials alongside research from independent partners,
T. 020 7071 3945 E. enquiries@growthinvest.com www.growthinvest.com
• Digital administration solutions and innovative products, driven by client demand, such as our diversified VCT service. • Personalised client service with an experienced team from institutional backgrounds: because technology is not always enough We have placed the adviser and their clients at the heart of everything we do. Contact us to discuss your specific requirements and for a demonstration of the future of alternative and tax efficient investing.
EIS Open
Evergreen
Close
Evergreen
Amount to be Raised: N/A Minimum Investment: £25,000
Oxford Capital Growth EIS Established in 1999, Oxford Capital is an alternative investment manager passionate about investing in early stage technology companies. For over 20 years, we have offered private investors access to many high-impact technology companies in sectors which the UK is considered a world leader. We partner with portfolio companies and founders to help grow their businesses and deliver meaningful impact in their fields. The Oxford Capital Growth EIS is an evergreen fund that offers investors the opportunity to invest in a portfolio of shares in early stage technology companies that have the potential to grow rapidly. The portfolio of 8-12 companies provides exposure to sectors such as artificial intelligence and machine learning, financial technologies and future of retail. We aim to invest in companies that are:
T. 01865 860760 E. investors@oxcp.com www.oxcp.com
• Run by credible, talented and highly driven entrepreneurs, founders and management teams • Solving commercial, technological and scientific problems in innovative ways • Businesses that have the potential to have a positive impact to the environment and on society We aim to fully invest each initial subscription within 12-18 months and exit most investments within 5-7 years. Capital at risk, unquoted companies are a high risk investment.
I FAmagazine.com
29
Blackfinch Spring Venture Capital Trust
8 Reasons Why Blackfinch Aligned with Clients
High Hurdle for Performance Fee
Blackfinch invests in every company off its own
The performance fee of 20% will only be
balance sheet, ensuring alignment with clients. Also,
taken when the portfolio exceeds the high
the team does not receive contractual bonuses and
water mark, being the higher of 130% or the
instead is incentivised through the performance
highest performance value per share at the end
fee. This ensures that they are focused on selecting
of a given period. This demonstrates our
the best companies, making them successful and
confidence in the great potential of these
targeting timely exits.
underlying companies.
Solid Return Strategy
Expert Team Including Tech Founders
The team invests in high-growth firms. Its criteria
The team includes award-winning tech start-up
include: capacity to grow by disrupting large growing markets, typically of at least £1bn; and the potential for significant returns at exit. Firms must also have delivered on previous funding rounds, and show strong growth and revenue.
founders and technology specialists, who also manage the Blackfinch Ventures EIS Portfolios. This creates potential for the VCT to make follow-on investments in successful investee firms funded from the EIS.
Value-Add Venture Partners
Rigorous Due Diligence Processes
The team aims to appoint value-add non-
The team’s standout processes include checks on
executive directors, to investee firms’ boards,
a firm’s tech and team, and assessing financial, tax,
named ‘Ventures Partners’. With decades of
market and competitor risks. These cover onsite
experience in tech, our Ventures Partners use their
checks by a sector expert; 3-4-hour initial pitch
contacts and expertise, sharing knowledge and
sessions with founders; and leading tax specialists
opening doors for firms.
checking tax status.
Potential for Special Dividends
In-built Diversification
The target is for 5% dividends in 2024. If the
The VCT benefits from diversification at several
VCT benefits from earlier company exits, or exits
levels. It’s invested in a range of companies, at
greater than expected, then Blackfinch will issue
varying stages of growth, which operate in
special dividends.
different tech-based sectors.
IMPORTANT INFORMATION
Capital at Risk. Blackfinch Spring VCT Plc, 1350-1360 Montpellier Court, Gloucester Business Park, Gloucester, GL3 4AH. Registered company in England and Wales Company no. 12166417.
Committed
