Stephen Page’s Start up Funding Club, the Seed Investment Enterprise Scheme (SEIS) funding specialists, have announced the launch of their 2015 fund, following on from the success of the 2014 version, which invested in 15 early stage companies and is currently valued at 106% of cost, with no failures among the companies chosen for investment.
Stephen Page is a veteran early stage investor with an enviable track record of sourcing promising early stage investment opportunities, from fields as diverse as IT, health, lifestyle, innovation and entertainment.
The goal of the fund is to provide value for investors by taking advantage of SEIS tax breaks, including income tax relief of 50%, and 50% exemption from Capital Gains Tax (CGT) up to a maximum of £100,000 invested, by assisting qualifying early stage and start-up companies to raise their all-important launch and development capital.
Start up Funding Club (SFC) are working in conjunction with Innvotec, the fund manager, and aim to deliver tax relief to investors, coupled with the opportunity to make sizeable returns from a diversified portfolio of carefully selected early stage companies over a five year period.
The minimum fund size will be £1 million, maximum £2.5 million, with a minimum investment size of £5,000. The fund plans to invest in at least 12 SEIS eligible companies, and an investment by no later than 31 December should provide tax reliefs for the 2014/15 tax year (which can be carried back to the previous year!). The fund is believed to charge the lowest fees of any fund in its sector, and the team at Start up Funding are optimistic that they can build upon the success of last year’s vintage.
Start up Funding Club (SFC) is able to call upon a large team of experienced industry veterans, including angel investors, investment professionals and business consultants with a wide range of specialist areas. Innvotec, the fund manager, has a strategic partnership with SFC, and are also veterans of 6 previous Enterprise Investment Schemes (EIS), and one SEIS, with an average uplift on commitment of 37% in addition to tax breaks received by investors.
Investors will be set to benefit from 30% of any upside once investors have received £1.10, and as there are no upfront charges, every £1 invested will benefit from SEIS tax relief. The fund expects that companies will reach exit stage within 5 years where possible, with regular reporting updates provided by the fund to investors on all of the portfolio companies.
SFC’s network of mentors and advisors provide the majority of the investment targets by leveraging their industry wide contacts, and subsequently working closely with the companies offering financial and growth consultancy.
Enterprise Investment Partners (EIP), the specialist small cap investment boutique established 3 years ago by Martin Sherwood and Christian Elmes, have been appointed to help market the fund, and Martin Sherwood, Head of Investment Promotion at EIP and a founding Director of the EIS Association, has commented “we believe that this is an outstanding SEIS offer from a very experienced investment stable, whose charges are, we believe, the lowest in the market.”
Investors will no doubt be aware that early stage investment can be a tricky business, despite the government having made the UK arguably the most attractive place for early stage investment in the world thanks to the tax breaks on offer, but SFC can boast a solid pedigree in the sector.
The team sources investments by leveraging a large and established network of mentors and “growth coaches”, and also holds regular events, such as the “Lion’s Cage” networking event which takes place at Home House, attracting numerous high net worth (HNW) individuals and investment syndicates. Whilst many people would baulk at the prospect of putting their savings into a Company that cannot show a revenue stream and has to rely on its promise alone, the fact that SFC have the ability to provide a diversified portfolio helps to alleviate the risk, as one or two company failures should not unduly upset the overall performance of the fund.
Being a perfectionist, however, with vast experience of building businesses from scratch, including Sapphire Group, an internationally successful data and technology company, it’s unlikely that SFC will allow any of their portfolio companies to experience such a fate.
The Companies chosen for investment in the 2015 fund include Geronimo, an addictive and social quiz games platform, MedArkive, a networking platform for pharma companies, publishers and doctors, Pub Check IN, a secure digital ID system, available as an app, enabling over 18s to verify their age and providing pubs and bars with promotional marketing opportunities, and fashion business London Sock Company.
The 2015 SEIS fund represents an opportunity for investors to get involved with early stage companies, save on their tax, and make decent returns, without being exposed to the market uncertainty and lack of experience that plague many start-ups looking for investment.
The start-up scene in London, if you believe the hype, and there are many powerful reasons to do so, is a fascinating and potentially lucrative place to be. With failure rates so high, however, with such a crowded marketplace, and with some rather dubious companies out there, it could be a sensible move to leave the stock picking to the experts.
for more information please contact Enterprise Investment Partners on 0207 487 8282, or visit www.enterprise-ip.com