Stellar Nova EIS Fund is a fund that aims to invest in 10 companies that are eligible for EIS or SEIS relief. The target return for each investee company is a six-year return of £2.85 after tax relief for each £1 invested. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. The aim is for the assets to be invested as soon as possible after receipt.
- Strategy: To invest in a portfolio of technology companies, with a unique support infrastructure provided before and after investment.
- New fund: This is a newly launched fund, but builds on the existing infrastructure from Nova.
The investment administrator
- Team: The experienced management group has spent a decade honing its methodology, supported by a large team of specialists. Stellar will bring an additional overlay to Nova’s team.
- Past performance: While the team has produced an impressive IRR on an unrealised basis, there have only been three exits to date.
Nuts & bolts
- Offer period: The fund is evergreen, with deployments each month, and expected full deployment within a quarter.
- Diversification: Primarily EIS investments, with an option to have SEIS investments as well. The aim is to invest in seven to ten companies.
- Valuation: Investors will have access to an in-house online system, which will be updated on an ongoing basis.
- Fees: All fees, apart from the performance fee, are charged directly to companies.
- Performance fee: 20% on gains over a return of 120% of total capital invested.
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- Risk mitigation: Nova’s focus is on using the support it provides to mitigate the investment risk of investing in new startups. There is some evidence that this is effective.
- Target return: Overall, as is normal for (S)EIS funds, the strategy is high-risk, with a six-year return target of £2.85 (including tax relief). Individual investments will have a higher target, offset by a proportion of failures.