November 2020
PRAETU RA VE NTU RES
TRANSPARENCY IN THE INDUSTRY:
IT IS TIME EIS
HIT THE MAINSTREAM Jonathan Prescott is Business Development Director at Praetura Ventures, and speaks to IFA and GBI Magazine about how open and honest communication can help to build trust and confidence in the EIS industry
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t a time when businesses are focused on resilience and growth against a challenging background, more advisers are recognising the role venture capital and the Enterprise Investment Scheme (EIS) can play in portfolio construction and financial planning. The EIS industry has been around since 1995, and in the early days, EIS investors were typically individuals who made hay on a deal-by-deal basis. In more recent times, wealth managers have started to see the benefits of it as a tax planning vehicle, whilst also identifying its value as an alternative asset class. Institutional fund managers and wealth managers are allocating funds to venture capital as a way of building a diversified portfolio and providing access to an asset class which can have potentially rewarding results for investors.
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Over the last six months it’s become increasingly evident that there is a need for investments to be aligned to the sectors which will fuel economic recovery post-Covid-19. EIS gives investors the ability to focus on supporting the sectors that will flourish in this new landscape, rather than continuing to invest in an existing portfolio which was constructed in a pre-Covid-19 world, where the future looked very different to what we’re now witnessing. One of EIS’ biggest draws is that it can give investors access to investments in fast-growth, start-up businesses. These firms are the engine room of the UK economy and will be crucial to Britain’s efforts to ‘build back better’ from the impact of Covid-19. Clearly, investments into early stage businesses come with additional risk, and this needs to be considered in light of each individual investor’s objectives and risk appetite. But while EIS is growing in popularity, it hasn’t yet reached its full potential, and for many isn’t yet viewed as a mainstream
I FAmagazine.com
