Blackfinch Ventures EIS Portfolios is a discretionary portfolio service, which will provide a portfolio of investments in unquoted technology companies. The target return is an average of 3x-5x capital. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. The fund is evergreen.

Why invest

Positives

• Strategy: Exposure to a portfolio of technology companies that have achieved product-market fit and are starting to scale up.

Issues

• Track record: Having been investing in this strategy since 2019, the track record is limited.

The investment manager

Positives

• Team: There is a diverse range of experience in the team, with a clear strategy and well-designed processes.

Issues

• Team size: The Ventures team in Blackfinch is expanding quickly, ahead of expected future growth.

Nuts & bolts

• Duration: The fund is evergreen, with investors participating in transactions on an ongoing basis after investment.
• Diversification: The manager expects to provide at least 10 investments to each investor.
• Valuation: This usually changes at next financing or on writedown. From the end of 2021, the fund will follow IPEV guidelines and align with Blackfinch’s VCT.

Specific issues

• Fees: A combination of direct fees and company charges.
• Performance fee: This is charged at 20% on aggregate returns over 130% of the amount invested in companies on a per company basis.

Risks

• Target returns: The target IRR of 3x-5x capital suggests a high-risk investment strategy.
• Companies: Supplying risk capital to early-stage technology companies at the start of commercialisation. There will be a spread of company returns, as the successful ones will do very well, but those who fail may do so completely.