We tried to answer all of them and hopefully you will find responses you need in the list below.
1. Who can invest in our funds?
The underlying investments having a very high risk profile, the SFC funds are only open to sophisticated and high net worth individuals who understand the dynamics of early stage companies and are prepared to invest in acceptance of the risk-reward argument.
Potential investors will be required to complete a Client Suitability and Appropriateness form, which accompanies the Application Form, prior to making a commitment.
2. How can I invest in the fund?
An Application Form and a copy of the Fund Management Agreement are available on request from the Fund Manager. The form should be completed in full and returned to the Fund Manager plus a cheque or a completed telegraphic transfer for the amount subscribed.
3. How much money can I invest (min and max amount)?
The minimum investment amount is £5,000 (£10,000 in the Epicure SEIS Fund). There is no maximum although an individual’s total annual SEIS allowance under income tax and CGT relief is limited to £100,000 and in the case of EIS it is £1m.
4. What kind of portfolio will I own?
All Investors investing within the same Investment Period will receive an exposure to the same portfolio of 8-15 early stage companies operating across various sectors, from Technology to Food and Drink.
5. How quickly will my money be invested?
Our intention is to fully invest your funds in portfolio companies before the next bi-annual Closing Date (either 31st March or 30th November) so that investors can claim their relevant tax reliefs as soon as practicable.
6.Can I invest in the fund through my company?
Yes, however the SEIS and EIS tax benefits apply only to individuals.
7. How are gains realised?
The realisation of gains for investors is typically achieved through “exits”, i.e. the trade sale or (less commonly) the public listings of some of the portfolio companies. These liquidity events are typically occurring at a time when the portfolio company has achieved exceptional growth and increased its valuation significantly, thereby providing the Fund’s Investors with a multiple tax free return.
8. What return on investment should I expect?
There is a lack of data on the performance of angel investments as they are often private “deals” made by individuals which fall outside of any reporting requirement. Some studies have shown that on average, angel investments as an asset class seem to generate attractive returns with an overall return on investment is 2-2.5 times the original capital committed.
However these numbers need to be put in perspective and although it is the intention to generate attractive returns for investors, this cannot be guaranteed due to the high risk associated with this type of investment. In particular, your attention is drawn to section the Specific Risks described in the funds’ Information Memorandum.
9. What is the lifetime of the fund?
It is the intention of the Fund to realize the maximum number of successful “exits” from the portfolio between five and eight years from the date of investment in order to distribute cash gains to investors. Note that there is a minimum holding period of 3 years for SEIS investments.
10. Are there any upfront fees on the investment?
There is no upfront fee, meaning that 100% of an investor’s commitment qualifies for SEIS and/or EIS Tax Relief.
11. What are the ongoing fees?
There is an Annual Management Fee of 1.5% (1% in the case of the Epicure Fund) which covers reporting to Investors along with the fund’s administration and accounting.
As 100% of an Investor’s commitment is invested in the underlying portfolio, the Annual Management Fees are deferred until cash is received through one or more exits.
As an incentive, the Fund Managers will also be entitled to a total Performance Fee of 30% of the returns to Investors once Investors have received back their initial commitment - plus 20% (10% in the case of the Epicure Fund). The Performance Fee only becomes payable once the Hurdle Condition has been met.
12. Can I select my own portfolio of companies?
No. The selection is made by the Fund Manager in collaboration with Startup Funding Club.
13. Who manages the fund?
Innvotec will be the Fund Manager of the Startup Funding Club Fund with exclusive responsibility for deciding upon the investment strategy and each individual Investment.
Enterprise Investment Partners will be the Fund Manager of the Epicure SEIS Fund.
Startup Funding Club acts as strategic partner and adviser to both Fund Managers and is heavily involved in the selection and support of the portfolio companies.
14. What are the risks that I should be aware of?
An investment in the Fund is subject to a number of risks. Before making any investment decision, prospective investors should consider carefully the risks attaching to an investment in the Fund together with fully reviewing all other information in particular, the risk factors described on the Information Memorandum. This information does not purport to be exhaustive. Additional risks and uncertainties not presently known to the Fund Manager, or that the Fund Manager currently deems immaterial, may also have an adverse effect on the businesses of the Investee Companies. Potential investors should consider carefully whether an investment in the Fund is suitable for them in the light of the information in this Information Memorandum and their personal circumstances.
15. How do I claim the SEIS/EIS tax benefits?
The SFC Fund will invest only in SEIS or EIS qualifying companies and thereby ailow qualifying investors to claim tax relief in respect of either the current tax year or carry back to the prior tax year for the amount invested in each of the qualifying companies. Startup Funding Club will work with the Investee companies to provide investors with the SEIS3 and/or EIS3 certificates needed to claim the corresponding tax reliefs.
Taxation treatment depends on the individual circumstances of the Investor. An expanded and detailed guide to such investor tax advantages is available on request from Innvotec.
16. Who will own the shares in the underlying companies?
The shares in which the Fund’s cash is invested will be subscribed for, issued to and held by Innvotec (Nominees) Ltd, in a designated account and acting as nominee for the Investor and all Investors.
However, each individual investor will at all times remain the beneficial owner of the shares in the portfolio companies which correspond to his or her investment.
17. What is your experience with SEIS/EIS funds?
The SFC team successfully raised and fully invested five SEIS funds: Funding Alpha 2014, Startup Funding Club 2015 SEIS Fund, Startup Funding Club 2016 SEIS Fund, Fintech 2016 SEIS Fund and the Odyssey Mission SEIS Fund.
18. How can I mix my investment between SEIS and EIS?
Investors in the Startup Funding Club SEIS/EIS Fund can invest either exclusively in SEIS or EIS companies. Alternatively, Investors may commit to a blend of SEIS and EIS qualifying companies, the split of determined by the investment amount as described in the fund’s Information Memorandum.
The EIS portfolio will comprise companies that are more advanced in their development than those in the SEIS portfolio.
The Epicure SEIS Fund is SEIS only and will not include EIS qualifying investments.
19. Am I going to be paid dividends?
Given the nature of the underlying companies, Innvotec/Enterprise Investment Partners does not anticipate that any Investment will yield a dividend. In the unlikely event that dividends are received from any Investee Company, these will be distributed to Investors as soon as practicable after receipt. Any income received on shares held through the Fund may be subject to income tax in the hands of an investor.
20. Should I ask an advice from my wealth manager/financial advisor before investing?
If you are in any doubt, you should not invest in the Startup Funding Club Funds without having first taken personal financial advice as to its appropriateness and suitability for you as an investment from your stockbroker, authorised financial intermediary (such as an IFA), bank manager, solicitor or other person authorised by the FCA.
21. How do you work with portfolio companies after investing in them?
Startup Funding Club will provide post investment monitoring and support to all portfolio companies and will use its network of investors and partners to actively help the growth of companies.
You couldn’t find answer to your question? Email us and we will respond to it and we will add it to the list above!