Tomorrow is now | GBI26 | April 2021

FOR PROFESSIONAL INVESTMENT SPECIALISTS

MAGAZINE

TOMORROW IS NOW A P R I L 2 0 21

GOVERNMENT BACKED - GREAT BRITISH INVESTMENTS - EIS - SEIS - BR - SITR - VCT

INVESTING IN EIS DOESN’T ALWAYS MEAN HAVING TO INVEST IN THE ALL OR NOTHING, “BOOM OR BUST” TYPE START-UPS.

The SidebySide EIS fund targets growth companies that are already through the “start-up” phase and are now producing in excess of £1m of annual revenue. These companies are then mentored and supported by a management team responsible for over $1.5bn of exits, to date.

No initial or annual fees are charged to investors – Allowing for EIS relief on 100% of the clients investment.

Targeting a return of £3 per £1 invested, Net of all fees.

CONTACT Please contact James D’mello with any questions you may have: Mobile – 07957 712 407 Office – 0207 993 8686 Email – James@thesidebysidepartnership.com

CONTENTS

CHAPTER • 1 4-5

Better Together

GBI Magazine talks to Georgia Wheadon, Founder of Umii, about how support from Nova has transformed the development of her business

CHAPTER • 2 6-7

Tax year-end considerations

CHAPTER • 3 8-9

Three reasons why Newable's scale-up fund should be part of your client's EIS portfolio

Sarah Hendy of Blackfinch reminds advisers of key considerations when discussing EIS and VCTs with clients and providers

GBI's Alex Sullivan talks to Sanjeev Gordhan and Avantika Gupta about what makes the business unique

CHAPTER • 4 10-13 Clients looking for high growth investment opportunities

This planning scenario highlights how Octopus Ventures EIS SErvice could help clients diversify their investment portfolio whilst benefitting from valuable tax reliefs

CHAPTER • 5 14-15 Demystifying the costs of EIS

GBI Magazine talks to The SidebySide Partnership’s James D’Mello, to explore aspects about EIS fees and charges that managers might not tell you

CHAPTER • 6 16-17 Capitalising on calmer waters

EISA’s Mark Brownridge gets his telescope out and looks at what might lie ahead for EIS and SEIS

CHAPTER • 7 18-27 Open Offers

Our listing of what’s currently available for subscription

Disclaimer GBI Magazine is for professional advisers only. All material has been carefully check for accuracy but no responsibility can be accepted for inaccuracies. Wherever appropriate independent research and where necessary legal advice should be sought before acting on any information contained in this publication. The information and offers contained in this yearbook may not be suitable for all investors.

Readers should be sufficiently aware of the risks and ensure that they are of a suitable category as defined by the Financial Services and Markets Act to review and invest in any of the potential offers or funds. The information given in this publication is not to be construed as advice relating to legal, taxation or investment matters. The information contained in this yearbook does not constitute or form part of any offer to issue or sell, or any solicitation of an offer to subscribe or purchase any investment, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with any contract.

This yearbook is aimed at UK Investors and is not aimed at persons who are residents of any other country, including the United States of America and South Africa where the funds referred to herein are not registered or approved for marketing and/or sale and where the dissemination of information on the funds or services is not permitted. The information provided in the yearbook is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution, publication or use would be contrary to local law or regulation. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of GBI Magazine. No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this publication. As such, no reliance may be placed for any purpose on the information and opinions set out within it. Past

GBI Magazine is published by IFA Magazine Publications Ltd, 3 Worcester Terrace, Clifton, Bristol BS8 3JW

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Telephone: +44 (0) 1173 258328 Editor: Sue Whitbread sue.whitbread@ifamagazine.com

performance is no guarantee of future performance. The value of shares in any investee companies may go down as well as up and investors may not get back the full amount invested. Investors should not consider investing unless they can afford a total loss of their investment. Investments in unquoted shares carry higher risks than investments in quoted shares and involve a degree of risk as well as the opportunity of reward. It may be difficult to sell or realise the investment or obtain reliable information about its value. Any tax reliefs referred to in this publication are those currently applying or expected to apply. However, readers should be aware that tax reliefs and legislation can change. Their applicability and value will depend upon the individual circumstances of a given investor. Whilst the investments set out within may qualify for EIS and other tax advantageous breaks, there is no guarantee that EIS status or other tax efficient status can be maintained throughout the life of the investment. Both investee companies and investors need to comply with the requirements of the EIS legislation in order to maintain EIS Relief and non-compliance may result in the loss or partial claw-back of EIS Relief and potential interest penalties. The material in this yearbook is not to be regarded as an offer or invitation to buy or sell an investment, nor does it solicit any such offer or invitation, nor does it seek to endorse any particular investment product. Any information it contains is given in good faith, but no reliance should be placed upon the same. Applications to invest in any investment product referred to within should be made to the relevant promoter. GBI Magazine neither endorses any particular member, product or company/firm wishing to raise money under the EIS nor does it accept any liability for advice given.

GBI Magazine is published by and a trademark of IFA Magazine Publications Ltd, 3 Worcester Terrace, Clifton, Bristol BS8 3JW, Telephone +44 (0) 1173 258328 @2021 all rights reserved.

Contributing writer: Peter Wilson peter.wilson@ifamagazine.com Design: Becky Oliver

Publishing director: Alex Sullivan alex.sullivan@ifamagazine.com

Full subscription details and eligibility criteria are available at www.gbinvestments.co.uk ©2021. All rights reserved.

Full subscription details and eligibility criteria are available at www.gbinvestments.co.uk

GBI Magazine is for professional advisers only.

GBI Magazine is a trademark of IFA Magazine Publications Limited. No part of this publication may be reproduced or stored in any printed or electronic retrieval system without prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies, independent research and where necessary legal advice should be sought before acting on any information contained in this publication.

What do we mean by ‘government backed’?

In the interests of clarity, any reference made by GB Investments to the point that EIS, VCTs and similar investments are government backed relates to the government’s general approval of these schemes, indicated by their having granted them highly tax advantaged status. The use of this term does not imply that government would in any way act in the capacity as a guarantor or backer of last resort in connection with such schemes.

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NOVA

April 2021

BETTER TOGETHER Introducing Georgia Wheadon, Founder of Umii

Nova is an EIS and SEIS fund provider with a difference.

Its pioneering Nova Cofoundery was started in 2008 to build successful startups with ambitious tech founders - such as Georgia Wheadon, Founder of UMII. Here we talk to Georgia about her business and its development and find out how the support of Nova has made such a difference to its overall success.

GBI: COULD YOU START BY EXPLAINING TO US EXACTLY WHAT DOES UMII OFFER?

GBI: SO WHAT WAS LIFE LIKE FOR YOU BEFORE UMII?

GW: Very simply it is a well-being app. It’s designed to prevent social isolation and to help students at college or university to build friendships.

GW: Back in 2018 I was studying Human Geography and Sociology at Leeds University, and secured a placement at Nova (Nova Cofoundery Ltd). It was the first time that I got involved with start-up businesses, and I absolutely caught the bug. I then left university the following year and Nova was good enough to offer me a full-time role as a product manager.

Somehow, people seemed increasingly reluctant to introduce themselves to others face to face, whether in coffee shops, the union, or the library. There is a lack of social confidence. The app provides a safe digital environment for students to connect.

The Umii app is built on shared interests and personality traits, so that there is every chance that a friendship can be formed.

We see it as a way to reduce the number of drop-outs from university, with all the heartache and waste of resources that this entails.

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GBI: WHAT GAVE YOU THE IDEA FOR THE BUSINESS? GW: The original idea of the Umii app wasn’t mine but it was a concept that I completely empathised with. In my first year at university, I had a real issue with loneliness

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and isolation. I didn’t click with my flat-mates, and found it hard to build friendships. It was so bad that I nearly dropped out. So when the original founder of Umii resigned and I was offered the opportunity to become a shareholder and director and to take the company forward, I jumped at it. I was really encouraged by Nova to ‘go for it’ and it has turned out to be the best time of my life!

The original idea of the Umii app wasn’t mine but it was a concept that I completely empathised with

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pandemic. It has also made universities much more aware of the issue and that has made them more interested in talking to us.

GBI: WHAT DIFFERENCE HAS NOVA MADE TO YOUR BUSINESS AND ITS DEVELOPMENT? GW: We would be nowhere without the support that Nova has given. It has encompassed a whole range of aspects including the creation of a board of Nova colleagues with different skill sets that include creating a business model, tech developments, marketing to students, planning for future funding, and wisdom in some of the key decisions we have had to make.

GBI: WHAT PROBLEMS AND CHALLENGES DID YOU FACE IN SETTING UP THE BUSINESS?

GBI: AND WHAT DOES THE FUTURE LOOK LIKE FOR UMII?

GW: The biggest challenge was the concerns that universities have for student safety. The last thing that they want is to have an app that opens students up to scammers, or others that are trying to take advantage of the students. It has meant that the quality of our verification process has been absolutely critical. The other recent challenge we’ve had is that prospective students with conditional offers want to start engaging with like-minded people before they actually start at university. This opens up further security issues. Both of these challenges are being worked on.

GW: We are very excited about our future prospects. Our partnered universities can’t believe the impact that Umii has had! One university saw nearly 1400 users in the first 4 months and over 17,500 messages sent between their students. 52% of survey respondents at another university said Umii made them feel less isolated and lonely. There have now been over 12,500 individual connections made on the app…and these are growing fast.

We would be nowhere without the support that Nova has given

GBI: WHAT ABOUT THE COVID-19 PANDEMIC? HAS IT HAD ANY SIGNIFICANT IMPACT ON THE DEVELOPMENT OF YOUR BUSINESS? GW: Yes indeed it has. The pandemic has had a significant impact in 2 important ways. Before Covid-19 arrived, around 50% of students admitted to loneliness, and this has only got worse under the restrictions resulting from the

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We have had our first US university wanting to talk to us later this year and we are also interested in taking this concept to Australia.

Here in the UK we are also planning to target colleges and some new product developments. This includes the ability to signpost events, and also for the selective promotion of branded products.

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The Nova view ‘Georgia has taken to her leadership role like a duck to water. With her own experiences of what students need, she has identified very strongly with the needs of both the students and the universities. It is a need that is self-evident and it is exciting to be part of the solution.’

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BLACKFI NCH

April 2021

TAX YEAR-END P L A N N I N G C O N S I D E R AT I O N S

With the end of the tax year in sight, Blackfinch’s Sarah Hendy reminds advisers of some of the key considerations to be aware of when discussing Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) with clients and product providers

ASK WHEN INVESTMENT FUNDS WILL BE DEPLOYED While both the EIS and VCTs allow investors to claim up to 30% of income tax relief, only an EIS lets investors ‘carry back’ relief and reclaim income tax paid in the previous tax year. If your client intends to make use of ‘carry back’, it’s important to determine not just when your client plans to make their investment, but also when the product provider will deploy those funds. Carry back can only be applied to tax paid in the previous tax year, so the EIS manager needs to deploy funds in the current tax year in order for income tax relief to be allocated to the current and/or the previous (2019/20) tax year.

If your client intends to make use of ‘carry back’, it’s important to determine not just when your client plans to make their investment, but also when the product provider will deploy those funds

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Next, it is also well worth asking the EIS manager whether they are capable of making investments in the current tax year or whether the clients’ money will be invested across different tax years, which could impact any tax planning considerations you have discussed with your client. In addition, when it comes to EIS and tax year-end, discussing diversification with EIS providers is crucial. Many providers will practice diversification by targeting at least eight companies for your client’s investment to be spread over – so that exposure to any one investment is limited. But when you ask providers how many of these companies will be invested ahead of the tax year-end, this can often be as low as just four.

OFFSETTING INCOME TAX FROM OTHER ASSETS For clients considering either a VCT or EIS investment to offset income tax paid when converting another asset into cash (such as encashment of an offshore or onshore bond) it is important to understand whether the encashment could potentially see their taxable estate exceed the combined nil-rate band/residence nil-rate band – triggering a potential 40% inheritance tax (IHT) liability.

If this is a factor, and the client is suitable, then EIS might be the better option. Not only could an EIS investment help offset the income tax due but, after the investment has been

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held for two years, it could also have the added benefit of IHT relief via qualification for Business Relief.

DEFERRING A CGT LIABILITY While an EIS is able to offer capital gains deferral, and therefore capital gains tax (CGT) deferral, the gain cannot be deferred until the client receives their EIS3 certificates.

Investors must complete the claim form attached to the EIS3 certificate received from the company they have invested in, and attach the form to the CGT summary pages of their self assessment tax return.

Also, an EIS3 certificate will be issued for each underlying trading company within the EIS, not just one certificate to cover the entire amount invested. Therefore, certificates may all be issued at different times. In all cases, a client should expect to pay their CGT and then submit their EIS3 certificates once they have received them if this is after the corresponding tax return has been submitted.

Your clients may be looking to defer a capital gain, but given they have up to three calendar years to invest in EIS from the date they make that gain, they may be able to take advantage of combining CGT deferral with income tax relief. In cases where the client does not have a sufficiently large income tax liability in one particular tax year to benefit from this relief fully, a strategy of investing in EIS across different tax years, although still within the threeyear period, may prove beneficial.

NEW VCT OR OLD VCT? As a reminder, VCTs were created to encourange greater investment flow into smaller UK companies – to support the growth of the UK economy and to incentivise investors to place money into companies with the potential for high returns. Within the market, there is a significant number of VCTs currently available, most of which have a unique investment strategy, different diversifications (and dilutions) as well as different fund sizes.

Established VCTs have the benefit of past performance (some better than others) and the potential for regular dividend payments. For those established VCTs that have had favourable returns, the implication arises that this will continue, and they often raise further funds on the back of this assumption. However, could one argue that as a VCT

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Although investing in newer VCTs may not result in regular dividend payments for several years, many will look to target special dividends through earlier exits grows, and its shares become more diluted, is the potential for high returns at risk of being diluted away? It may not be that simple, but perhaps older VCTs would be more suitable for those clients looking to supplement their regular income, while younger VCTs may be more appropriate for those seeking that higher risk/higher return investment profile.

Although investing in newer VCTs may not result in regular dividend payments for several years, many will look to target special dividends through earlier exits. A blend of different types of VCT would help diversify portfolio risk, while also offering the potential to deliver high returns to those investors interested in putting risk capital to work over several years.

Ahead of tax year-end, having a good awareness of the subtle, yet important, tax planning differences between VCTs and the EIS will certainly help ensure clients take full advantage of the available tax reliefs.

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Capital at risk Sarah Hendy is Strategic Partnerships Manager at Blackfinch Group.

With over 30 years’ experience in the commercial and financial services sector, Sarah joined Blackfinch in 2014. She started her career in banking before joining the public relations department at the UKs leading flight simulator company. After a period overseas, Sarah then spent 12 years working in London in property & media before focusing her career on business & relationship development. Sarah has completed the PRI Academy ‘Foundations in Responsible Investment’ course and holds a Tax & Estate Planning Accreditation which includes a Certificate of Knowledge & Understanding in BR, EIS & VCTs. To find out more about the Blackfinch Spring VCT or EIS Portfolios, see: blackfinch.ventures Or get in touch to discuss further: Call - 01452 717070 Email - enquiries@blackfinch.com

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N EWABLE

THREE REASONS WHY NEWABLE'S

SCALE-UP FUND SHOULD BE PART OF YOUR CLIENT’S EIS PORTFOLIO Alex Sullivan, managing director of GBI Magazine, sat down with Sanjeev Gordhan and Avantika Gupta from Newable Ventures to discuss what makes the business unique

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efore joining Newable in 2018, Sanjeev had his own client bank at a national wealth management firm and sat on an investment committee's EIS panel. Avantika joined the Newable Ventures team in 2019 with a background in life science commercialisation and investing.

Together Sanjeev and Avantika helped share how they bring their perspectives to the table at Newable Ventures.

Sanjeev approaches his role as Ventures director with financial advisers in mind. He acknowledges it can be difficult for advisers looking at EIS, especially when researching the underlying investments in a given fund. EIS helps unlisted companies, so it’s essential that advisers understand the investment decisions made by a fund manager.

That's why Sanjeev thinks EIS fund managers have to make an extra effort to enhance transparency.

Sanjeev shared an example of the kind of transparency Newable has. Whenever Newable places an investment and it’s gone past the investment committee for approval, Newable sends out a vote call to all of their investors.

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Every £5,000 gets an investor a vote, and though it's not binding, it serves as a communication tool and a temperature gauger.

In the vote call, Newable's investment directors and analysts will write to investors, let them know the underlying investment, why they think it is a good idea, and the problem this product is trying to solve.

To date, Newable hasn't had a single majority no, and the process allows investors and advisers to engage with the funding journey.

Sanjeev said on this "These types of steps help Newable increase transparency in the market and make sure investors are on the journey with us."

Avantika is a highly experienced project manager with a background in the commercialisation of life sciences, which makes her well fitted for the Associate Investment Director role.

Newable's Scale-Up Fund follows a strategy in line with the expectations of the fourth industrial revolution.

The term was popularised at the World Economic Forum and stipulates that soon there will be a blurring of the lines between the biological, physical, and digital worlds.

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N EWABLE

Avantika mentioned that, over the last year, so much interaction has been happening online, with lots of data generated not from just human to human interaction but from machine to human and machine to machine interaction.

Avantika gave the example of the Internet of Things (IoT) technology, saying, "IoT has been in the media for the best part of ten years, but it’s now starting to materialise."

of investment houses, and they are active during the due diligence assessment process.

Depending on the type of investment, Newable will match the experience of an individual committee member with the investment director to help on that project.

DIVERSIFICATION

IoT utilises data gained through objects to optimise physical environments, creating 'smart' spaces that can respond to, or even predict, human action.

Clearly, the most integral pull to any fund is the fund itself.

The Newable Scale-Up Fund provides focused exposure to tech but across multiple sectors.

During the conversation, Alex asked Sanjeev for three reasons why Newble's scale-up fund should be part of an advisers EIS portfolio. His response is detailed below:

Avantika explained the fund as having a broad remit, but at the same time having a narrow focus on the aims and strategy.

THE WIDER NEWABLE GROUP

The fund strictly supports pre-series-A businesses, usually post-seed, with a deep tech focus. Newable's aim is always to get companies to a series A readiness.

Newable is not simply an EIS fund; it also provides professional support, advice and workspaces to pre-series A start-ups. Sanjeev commented, "at this end of the market, it’s crucial we can support the start-ups by providing a whole raft of services."

Newable has 60 flexible workspaces across the UK, from Southampton to Aberdeen. This alone has left Newable uniquely placed to adapt to post-pandemic working habits.

The support Newable provides goes full circle to the investor; the better they can support their businesses, the more successful the investee companies are which leads to higher valuations and returns for investors.

Newable’s advice team can help a business expand into different territories or extend research and development.

INDEPENDENT INVESTMENT COMMITTEE With a combined experience of over 120 years, Newable’s 6 member independent investment committee is one of the key elements that makes the firm unique.

The committee is made up of investment professionals who represent multiple later-stage funds or other types

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Avantika explained the fund's approach is sector agnostic; they tend to look at investments from the viewpoint of converging technologies.

That could be a biology and data meeting, or manufacturing and life sciences or life sciences and materials.

Avantika and Newable look for companies that are disruptive on those borders, and able to demonstrate some customer interest, and have demonstrated market pull for that technology.

To watch the full interview please click here https:// ifamagazine.com/article/newable-helps-to-demystifyeis-for-advisers/ GBI

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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CLIENTS LOOKING FOR

HIGH GROWTH INVESTMENT OPPORTUNITIES

This planning scenario explains how the Octopus Ventures EIS Service could help clients diversify their investment portfolio, whilst benefitting from a range of valuable tax reliefs

ABOUT THIS SCENARIO This tax-planning scenario is designed to help advisers develop appropriate planning strategies for their clients. Advisers should consider, among other things, the value of tax reliefs for their client. You will also need to consider the impact of charges (including initial fee and ongoing fees, such as annual management charges) relevant to the products represented and/or any specific product you have chosen. Nothing here should be viewed as advice.

Any suitability decisions should be based on a comprehensive review of your client’s objectives, needs and attitude towards risk. For more details and information about the associated risks, please see the relevant product literature available at octopusinvestments.com.

MEET DAVID, WHO WISHES TO DIVERSIFY HIS INVESTMENT PORTFOLIO INTO HIGH GROWTH OPPORTUNITIES David, 50, is a director in his firm, and a high earner with a salary of £170,000 a year – on top of which he receives a bonus. This year, the bonus is £120,000. Normally, he invests part of his bonus in long-term investments.

Every year he utilises his annual pension allowance, and has previously invested twice in Octopus Titan VCT – the largest venture capital trust in the UK1.

This year he would like to use part of his bonus to diversify his long-term investments, and is looking for something that feels more exciting with the potential for high growth. He understands that investments with significant growth potential are typically high-risk.

In addition to targeting significant returns, David is also passionate about helping small businesses succeed. So, he is keen to use this money to help fund some innovative companies, whilst being part of their growth story.

Association of Investment Companies,30 September 2020.

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AN EIS SOLUTION FROM OCTOPUS David talks to his financial adviser, who makes an assessment based on David’s objectives, risk appetite and attitude towards small company investing, and recommends the Octopus Ventures EIS Service.

The adviser explains that this investment will provide David with shares in 10-15 exciting, early-stage businesses, each selected for their potential to grow by ten times over the next five to ten years.

David knows Octopus from his previous investments in Titan VCT, and that Octopus has backed, supported and exited some extraordinary rising stars which are now household names (including Zoopla, Graze, Secret Escapes and Tails.com).

His adviser explains that investing in companies aiming for such high-growth is high-risk, and not all early-stage companies succeed. However, to provide an incentive for the risk involved, there are valuable tax reliefs that David could receive.

David is able to claim 30% tax relief on his investment, which is available to offset against his income tax, such as the tax on his bonus. Where a company in David’s portfolio achieves the high growth targeted, it will be free from capital gains tax. His adviser explains that where a company fails, David would be able to claim loss relief against income tax or capital gains – even if his portfolio has increased in value overall. As David is an additional rate taxpayer, he could claim loss relief at his marginal rate of tax of 45%.

His adviser explains that this can mean that an EIS portfolio is a very attractive way to make high-risk investments in smaller companies in the pursuit of growth.

David chooses to invest £100,000.

AN IMPORTANT REMINDER ABOUT KEY RISKS

• Tax treatment depends on individual circumstances and may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status.

• The shares of smaller 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.

HOW DAVID’S INVESTMENT IN OCTOPUS VENTURES EIS SERVICE WORKS Income tax relief on investment • After Octopus’ initial fee and an initial dealing fee have been paid, David will invest £97,030.

• For simplicity, we have assumed David’s money is invested into five EIS-qualifying companies, each of equal weighting in his portfolio. In reality Octopus Ventures EIS Service portfolios are expected to contain 10-15 companies and the amount invested into each company may vary.

His adviser ensures David is full aware of the risks of making EIS investments

• He claims 30% income tax relief totalling £29,110 (£5,822 per company).

• The service is high-risk and should be considered as a long term investment. The value of an investment can fall or rise.

Investors may not get back the full amount they invest.

• David is entitled to claim this relief in the year the investment is made into each EIS company, or could choose to carry it back to the previous tax year.

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• As Octopus will invest into early-stage opportunities as they arise, all of David’s investments may not be made in the tax year in which he subscribes to the portfolio.

• He chooses to set this against his income tax bill for the current year. This reduces the £54,000 tax bill on David’s £120,000 bonus to £24,890.

David’s investment journey • Some of the companies in David’s portfolio benefit from strong performance over the next eight years, with two delivering very attractive growth when they are sold.

One company never achieves success and simply returns the amount David invested when it is sold, and two fail completely, losing all of David’s capital. Overall, David’s £100,000 investment in the service returns £271,684 of proceeds when each company is sold.

• David chooses to offset the effective losses of £27,556 against his income in the tax year each loss occurred.

As an additional rate tax-payer, he obtains relief at 45% totalling £12,400.

• Importantly David is entitled to claim this relief despite his overall portfolio generating positive returns.

• Also, because Octopus’ AMC and performance fees are only paid where a company is sold for more than the amount invested, David does not pay a performance fee or any of the AMC that has accrued on these companies.

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Capital gains tax-free growth on the “winners” • Of the two companies in David’s portfolio that perform very well, one grew by three times the amount David invested and one grew by ten times. This means that of £38,812 invested in these companies, David receives £137,762 after paying Octopus fees.

• The gains made on the sale of these shares are tax-free. Had the shares not been EIS-qualifying he would have owed a total of £42,111 in capital gains tax at his marginal rate of 20%.

Loss relief against income compensates for the “losers” • Over the years, two of the companies in David’s portfolio fail to prosper, and all of the capital that David invested into them is lost.

• David is entitled to claim loss relief in respect of his effective loss, which is the dealing fee plus the amount he invested into each company (£19,600) less the income tax relief claimed (£5,822). This amounts to £13,778 on each failed company.

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DEMYSTIFYING THE

COSTS OF EIS Ever wonder what some EIS fund Managers aren’t telling you?

GBI Magazine’s Alex Sullivan spoke to James D’Mello, The SidebySide Partnership, to dig down into the nitty gritty of the Enterprise Investment Scheme and give you and your clients the inside edge on fees and charges PERFORMANCE FEES Performance fees are simply fees on performance, but managers charge them in different ways. Performance fees can be charged against the overall portfolio or against individual investee companies.

The first structure means a fund manager will charge a fee on your client’s investment, while the latter means a fee will be charged on the profits from each company as they exit.

These structures means a client can have two very different investment outcomes from the same investment journey.

Theoretically, when performance fees are charged against individual companies in an EIS portfolio of ten companies, where nine failed and one made a five times return, your client would be charged on that one exit, despite making an overall loss.

PERFORMANCE HURDLES A performance hurdle is a hurdle over which performance fees are charged. This means that if a fund manager returns over a set percentage through an exit, they will charge your client performance fees for it.

Performance hurdles are crucial for advisers and investors to understand because charges can apply on modest returns, after inflation and other fees, leaving the client with overall negative returns on a long term investment.

It’s also important for advisers to know two things about performance hurdles. Firstly, if a fund’s performance hurdle is a net profitable return, make sure that's on 100% of the investment not 70%. The 30% tax relief on investment usually isn’t factored into performances fees, but can be and can make a big difference to your client.

Secondly, there are a lot of funds that have performance hurdles and there are some that don’t. It is worth factoring that into your due diligence. Performance fees will have an effect on your client’s returns.

The 30% tax relief on investment usually isn’t factored into performances fees, but can be and can make a big difference to your client

These fees can range from 20-35% and they can serve to align a fund manager’s interest with your client’s.

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HIDDEN FEES Fees will always be presented in different ways, but if you convert them into a percentage they can add up quickly.

Most fund managers will say they won’t charge your client fees directly and a lot funds can charge fees to their investee companies. This means that whatever a client invests into the fund, 100% will be available for tax relief purposes, but if the company comes to sell it will still come off the client’s returns.

CoInvestor, along with the EIS Association has published a report revealing thirty six different words managers used for fees and charges. No wonder there is confusion!

Fees can also be absent from a fund manager’s investment memorandum.

Another important question for an adviser to ask is if the fund manager has an uncapped structure.

With all of these potential fees its important you ask the fund manager and do your due diligence to ensure that you have a full picture of the costs that are likely to impact on your client’s overall investment return.

There is a big difference between an internally given valuation of a business and an externally given valuation

INTERNAL VS EXTERNAL VALUATIONS Business valuations are a key part of the EIS industry.

There is a big difference between an internally given valuation of a business and an externally given valuation.

Managers can work company valuations two ways.

Some will only change a company’s valuation at the point of an external investment coming in or a third party revaluing the company through a typical audit process.

The other way is for fund managers to internally value the companies themselves. Funds that don’t have highly qualified members in their team to do valuations, and still

GB Investment Magazine

do them, can lead to difficulties for an adviser who has to manage their client's expectations.

IS TAX RELIEF INCLUDED IN MY CLIENT’S RETURN? Tax relief is a by-product of EIS and VCTs. If a manager deploys funds into a company under EIS then they qualify for tax relief.

Some managers include that tax relief in their returns forecast which can mean that for example, a target return of 3x is actually only a target return of 2.1x when you take out tax relief. This could affect an advisers recommendation and should be included in the suitability report.

As with all the issues raised, the best way to find the answers is to ask your fund manager, or, of course, you can always ask James D’Mello himself.

WHO ARE THE SIDEBYSIDE PARTNERSHIP? SidebySide specialises in investments into later-stage EIS businesses already producing over £1m of revenue, helping to mitigate the start-up risk prevalent in a lot of EIS investments.

During the conversation with GBI Magazine, James was eager to highlight that SidebySide is on the right side of all the topics covered above and that he is happy to talk to advisers about them.

Watch the interview on https://ifamagazine.com/article/ what-are-the-hidden-fees-in-tax-efficient-investments/

GBI

About James D’Mello James has over a decade’s financial services experience from a range of specialisms including banking, pensions & investments.

During his time working at one of the major platforms, James oversaw around 5000 EIS transactions, giving him a very unique, behind-thescenes insight into the EIS industry.

Today, James is Head of Business Development at SidebySide, where he joins a management team responsible for over £1.1bn in exits to date.

Email James at; james@thesidebysidepartnership.com

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April 2021

E ISA

CAPITALISING ON

CALMER WATERS EISA’s Mark Brownridge gets his telescope out and looks at what might lie ahead for EIS and SEIS

W

hilst the Budget passed without a single mention of EIS or SEIS, there was however some insight into how the Government may transition from fostering recovery to fostering growth within the “Build, Back, Better” document that accompanied it. This document did mention EIS and SEIS, albeit in passing, but this was certainly an acknowledgement that the schemes have an important part to play in future plans and are not being ignored.

rebuild and strengthen their ships, get back out on the waves and capitalise on calmer waters?

But let’s not worry. Firstly, as has been abundantly apparent for some time now, EIS and SEIS are fully focused on growing and developing businesses. Whilst the Government is more concerned with saving and propping them up, it’s easy to understand why the schemes aren’t being talked about. For now, at least.

More recently the Chancellor pronounced in the House of Commons as recently as December 2020 that the “world beating EIS and SEIS programmes provide significant support for private investors to help fund new businesses and we look forward to hearing thoughts on how to expand those schemes”.

As we slowly move out of the pandemic (fingers crossed), economically attention moves away from recovery mode i.e. simply keeping companies from going out of business by making access to loans and grants much easier, to growth mode i.e. now these companies have survived, how do we get them back on that growth path that they were following preCovid so they can expand, develop and increase revenue staff and the other usual key business growth metrics.

What could some of those expansions look like? Well, EISA have lobbied for a raise in the SEIS limit from £150,000 to £250,000, an abolition of the rule that restricts companies more than 7 years being eligible for the relief and an increase to the limits on how much a company can raise both annually and over their lifetime.

To use a simple Jonathan Van Tam style analogy, the pandemic has been a perfect storm for many businesses (particularly hospitality and retail) who have been rocked by strong waves and appalling weather, some sunk but others with the help of Government funding and loans have made it to shore, battered but intact. Now these businesses have reached a safe harbour, how do they

16

REBUILD AND STRENGTHEN And it’s rebuilding and strengthening where we believe EIS and SEIS can play a significant part. The Government has already signalled its intentions towards the schemes as announced in the Tory manifesto.

From the Government’s Building Back Better document, it’s clear it particularly wants to focus attention and funding on certain sectors. The majority of those sectors are smack bang in the sweet spot of where EIS and SEIS is already focused, specifically, Net Zero, Impact Tech, Artificial Intelligence, Fintech and Deep Tech.

The recent Tech Nation report identified that the UK’s tech sector is growing 6 times faster than the rest of the UK economy combined; is valued at almost $600bn (double

GB Investment Magazine

E ISA

April 2021

that of our nearest competitor, Germany). The UK also has more than 80 unicorns headquartered around the country.

the EIS and SEIS schemes aren’t classified as subsidies so aren’t part of TCA.

These companies are already driving our economic recovery (5 unicorns in the tech sector have already been created in 2021) and will continue to shape the society of the future. The tech sector already employs almost 3 million people and creates both high value tech and non-tech jobs.

The UK has announced it will introduce its own subsidy regime and are currently consulting as to the best way of doing this. Add to all this that whilst the UK has repealed all EU State aid regulations from the UK domestic law from 1 January 2021, it is necessary to retain them for the purposes of the Protocol on Ireland/Northern Ireland. This keeps Northern Ireland under most EU State Aid restrictions and means any relaxations to EIS and SEIS are unlikely, at least in the short term.

Funding this sector has to be a priority. Speak to any tech entrepreneur and they will quickly and vocally tell you how important EIS and SEIS was and will continue to be for their business as only equity funding supports fast and effective growth. Debt funding keeps the engine ticking, equity funding supercharges the engine! So keep an eye out on fiscal announcements and budgets later this year.

TALKING TAX Lately, we have seen rumours swirl around a number of tax options. A Wealth Tax had backers for a while but seems to have lost support. The Independent Wealth Tax Commission (doesn’t sound very independent!) suggested a wealth tax on all individual wealth above £500,000 and charged at 1% a year for five years would raise money from those least affected by the pandemic.

Traditionally, Tory Governments have veered away from these types of tax rises but they are popular abroad. CGT rises have also been mooted, in particular aligning CGT rates with income tax rates. This is a double-edged sword as it would most certainly affect founders and entrepreneurs when they come to exit their business and penalise a group who already get little in the way of reliefs either at the inception of the business or at the end.

However, it probably makes EIS a more attractive investment as investors seek to utilise CGT deferral to invest gains made from other investments. There is also a suggestion that IHT could be in the crosshairs. Again, given EIS has IHT reliefs, this may have an effect on the schemes and given the nature of the recommendations on IHT already made, any changes are likely to beneficial.

EU STATE AID Thirdly, although EIS and SEIS no longer come under auspices of EU State Aid, the schemes are in somewhat of a no man’s land. Whilst the Trade and Cooperation Agreement (TCA) agreed with the EU has a subsidy regime,

GB Investment Magazine

Why is this third point important? The EIS and SEIS legislation comes (or came) under EU State Aid legislation which means whilst we were part of the EU, the UK had to abide by EU legislation relating to the scheme and had no independent mechanism for making any changes we would like to make. Remove the EU from the situation and all of a sudden we become masters of our destiny again and potentially have the ability to make as many changes as we like to the schemes, including increasing tax reliefs and limits or removing unhelpful conditions. So whilst it might take a while to work through what changes would be most beneficial to the UK, we do at least now have the power to do so.

So, the omens are good. The UK has the power to make substantive changes to the scheme now we have left the EU. It has the incentive to make substantive changes in terms of fostering and nurturing a tech start and scale up economy and we also have the technical ability to make substantive changes with proposals to radically alter the tax environment. The question now is whether it is prepared to rise to the challenge and embrace such changes.

GBI

About Mark Brownridge 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 PFS and also sits on the CISI’s 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.

17

M AGAZINE

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GBI OPEN OFFERS A selection of tax efficient opportunities currently open for investment 18

GB Investment Magazine

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

GB Investment Magazine

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 Evergreen

Amount to be Raised:

£10m+ this year

Minimum Investment: £10,000

Haatch Ventures EIS Fund Haatch Ventures is an award-winning EIS Fund offering full deployment into 4-6 new investee companies per tranche.

The Haatch Ventures EIS Fund is managed by four successful entrepreneurs who have between them founded, grown and sold businesses worth over $150 million.

The fund aims to back four to six early-stage digital transformation businesses in sectors the team knows well, such as software-as-a-service, on-demand, gig-economy and digital consumer.

The team invest where they believe they can use their considerable experience to add value. Haatch refers to this as its ‘Smart Money’ approach.

T. 01780 408487 E. fred@haatch.com www.haatch.com

EIS Open

Close

March 2012

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

“The Fund has a target return of 10x which is significantly higher than any other SEIS or EIS fund currently fundraising and listed on MICAP, and the track record of Haatch Angel somewhat supports the ambition of this target.” – MICAP.

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: as at 31st December 2020 • 85+ years experience in EIS. • 247 EIS qualifying investments • 61 companies backed • £84m invested by Par leveraging a further £135m • 9.8 months average time taken to full deployment into 8 companies • 96 days EIS3 • 22 realisations

EIS Open

1st February 2020

Close

Evergreen

Amount to be Raised:

£20m raised, uncapped Minimum Investment: £25k

• 3.8x money multiple (before tax relief)

• 27% IRR

• 4.5 years average holding period.

Scale Up EIS Fund This is Fuel Ventures flagship EIS fund that we have been investing from for 5 years. We invest into 10-15 technology companies each year, with a focus on businesses that are marketplaces, platform or software. We now have 40+ portfolio companies and after 5 years our first fund has an average multiple uplift of 5.6X, validated by external fundraising rounds.

We have an advisory committee with over 50+ year’s experience and exits totalling £3bn+. We put a Director on the Board of every company we invest in and take an active and hands on role in the management and development of each company, plus bring added extra value through our network of sector experts. As a team, we invest 5-10% in total in every fund alongside our investors, which is £2m - £3m into the current fund.

T. +44 2038689723 E. investors@fuel.ventures https://fuel.ventures/

20

GB Investment Magazine

Open Offers

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.

EIS Open

April 2017

SEIS Close

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

EIS Open

Evergreen

SEIS Close

Evergreen

Amount to be Raised: N/A Minimum Investment: £5,000

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 ixdes whole-of-market access to alternative and tax efficient investments for the clients of financial advisers, wealth managers and investors.

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.

GB Investment Magazine

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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.

22

GB Investment Magazine

Open Offers

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

Close

Evergreen

Amount to be Raised:

Mercia EIS Funds The Mercia’s EIS funds have been independently reviewed multiple times and are recognized to be amongst the top four EIS fund managers – please request reviews from enquiries@mercia.co.uk.

N/A

Mercia EIS fund creates diverse, early-stage portfolios of technology companies, investing nationally with a focus on the underserved regions of the UK, where the investment entry prices are substantially improved, which enables superior returns to EIS investors.

Minimum Investment:

Mercia has a large team of investment professionals, who are supported by in-house entrepreneurs.

Due to the scale of Mercia, it can provide value add services to portfolio companies, such executive search, access to our 750-strong network of NEDs, Chairman and FDs, legal and marketing support and discounts on software packages.

£25,000

Via the Complete Connected Capital strategy, the Mercia group can invest anywhere from £50,000 to £10m or more, enabling Mercia to be a very patient and supportive investor of high growth companies.

Highlights A portfolio of 10-15 companies, across industry sectors and stages from seed to series A.

T. 0330 223 1430 E. enquiries@mercia.co.uk www.mercia.co.uk

In the last 8 months, Mercia EIS fund has exited 4 companies very well, including Refract (1.8x), Clear Review (8.0x), Native Antigen Company (8.7x) and OxGene (16.3x). In 2020 Mercia won both of the Exit of the Year awards, and they have stated that this will be their primary target for the coming years, as Mercia states that “exits define the success of an EIS”.

Mercia EIS is part of the Mercia group of companies, including the Northern VCT, which has c£900m AuM, over 400 portfolio companies, 19 university partnerships, 8 offices and 110 staff.

The Mercia group sees about 3500 deals a year, deploys about £100m a year into regional business, and the EIS fund is less than 25% of that total. There is scope to deploy £250m per year into regional businesses, and there is no limitation on the size of the EIS fund.

Due to the number of companies that Mercia invests in per year, the EIS fund deployment averages under 8-months at the time of writing, although Covid-19 has slowed deployment down, Mercia fully expect to capital within a year.

GB Investment Magazine

23

EIS Open

Close

30 November 2018

Evergreen

(monthly closes), next closes

26th March 2021 30th April 2021 Amount to be Raised:

£10,000,000 (£4,400,000 raised to date) Minimum Investment: £25,000

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.

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 £2.5bn AUM itself.

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 >£2.5bn AUM – with 27 years group history (including a FTSE-250 Healthcare REIT) – solely Scale-Up, and since inception, solely Data, Digital, EdTech & Health

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

– with exciting track record of Venture Investments since 2014 – with meaningful partial exits (+84% first-time score by MJ Hudson Allenbridge)

Jenson SEIS Fund Jenson are one of the longest running SEIS Fund Managers and have been investing in early stage growth companies since 2012 with over 110 investments to date. 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).

Highlights

T. 020 7788 7539 E. invest@jensonfunding.com www.jensonfundingpartners.com

• Two tranches closed and deployed this year.

• Target Size – £3 million in respect of the 2021/22 tranche.

• Diversified Portfolio of 8 to 12 investments per tranche.

• Nine exits to date with a range of multiple returns from x.5 to potential of x12.

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

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.

• Solid pipeline of investment opportunities with capacity to deploy, targeting £6m for deployment into 10-15 portfolio companies.

• First EIS Exit in February 2021 providing a return to on two Funds from 1.4x to 2.2x which should increase with companies that still remain in the fund.

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GB Investment Magazine

Open Offers

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% per share for new applications received before 3pm, 5 April 2021 • 1% per share for existing investors (additional to the above discount) 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.

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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)

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GB Investment Magazine

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:

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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Handpicking the UK’s most promising tech firms Only applying our performance fee on gains above a high hurdle of £1.30 for every £1 invested.

Only taking our annual management charge for the first four years.

Investing with ESG (Environmental, Social and Governance) in mind, searching for companies making a positive impact.

Targeting 3-5x return across a wide-ranging portfolio of companies in different sectors.

Leading with a team highly experienced in start-ups including award-winning tech founders and technology specialists.

Blackfinch Ventures EIS Portfolios Find out more at www.blackfinch.ventures Capital at risk.

Blackfinch Investments Limited is authorised and regulated by the Financial Conduct Authority Registered address: 1350-1360 Montpellier Court, Gloucester Business Park, Gloucester, GL3 4AH. Registered in England and Wales Company Number 02705948.