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, although there is now a successful exit.
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 has expanded 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: The fund will follow IPEV guidelines and align with Blackfinch’s VCT (which is audited).
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.
