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VGC Partners

VGC Partners Specialist EIS Fund I

05 Apr 2022 / Tax enhanced research

The VGC Partners Specialist EIS Fund I is an Alternative Investment Fund, which will provide a portfolio of early-stage technology investments. The target return is 5x invested capital before fees. Returns will be focused on capital gains, and investors are unlikely to receive any dividends. This is the first of an intended annual series of funds.

Why invest

Positives

  • Strategy: Investing in a range of consumer-focused technology companies supported by corporate partners.

Issues

  • New fund: While VGC has managed institutional and SEIS funds in this area, this is a new fund.

 

The investment manager

Positives

  • Team:  An experienced and growing team that has been managing venture capital investments for a decade.

Issues

  • Track record:  Both the (S)EIS and institutional fund track records are promising, but there are few exits to date.

 

Nuts & bolts

  • Duration: The fund has a limited lifespan, with a single closing date of 29 April 2022, with deployment in the 2022/23 tax year.
  • Diversification: The manager aims to provide 8-10 investments for each investor.
  • Valuation: A mixture of last transaction and writedown, if appropriate.

 

Fees

  • Fees: Apart from an the performance fee, all are charged to investee companies.
  • Performance fee: Charged at 25% on aggregate returns over £1.25 for each £1 invested.

 

Risks

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