The Blackfinch Spring VCT will give investors exposure to a range of early-stage, technology-enabled investments. It is targeting a dividend yield of 5% from FY’24, with special dividends if realisations permit.

The report goes into details of how the investment process works, sourcing and decision-making, exit strategies, post-investment governance and monitoring, fees and more. It also includes Hardman & Co’s unique fee calculation table, allowing advisors and investors to properly investigate their effect.

Why invest

Positives

• Strategy: Exposure to a portfolio of scale-up, technology-enabled companies, with good management and large markets.

Issues

• No dividend yet: This VCT was only launched in 2019 and is targeting a first dividend in 2024.

Fund manager

Positives

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

Issues

• Track record: The Ventures team is still relatively new and has a limited track record.

Nuts & bolts

• Offer: To raise £20m, plus a £10m overallotment, with a closing date of 3 April 2023 for the 2022/23 tax year, and final close on 23 August 2023.
• Diversification: As of September 2022, the VCT had 17 active investments, but Blackfinch has an active deal pipeline, and this is improving steadily.
• Buybacks: At a 5% discount to NAV, subject to available reserves and board approval.

Fees

• Fees: Fees and expenses are subject to a 3.5% cap (excluding performance fee).
• Performance fee: 20%, subject to a 130p minimum.

Risks

• Target returns: A target return of 2.5x for individual investments suggests that the strategy is high-risk investment.
• Companies: Early-stage, technology-enabled companies at the start of scale-up. There will be a spread of company returns, as the successful investments will do very well, but those that fail may do so completely.