Fund offers investors an opportunity to invest in technology stars of tomorrow
Force Over Mass Capital, the specialist technology start-up fund, has launched aSeed Enterprise Investment Scheme (SEIS) –Enterprise Investment Scheme (EIS) fund which will invest in fast growth technology companies. The Force Over Mass Capital SEIS EIS Fund (Fund) will provide high net-worth investors with the opportunity to invest in technology, through a risk-mitigated portfolio of early stage technology companies with high growth potential and potential tax reliefs of up to 64% of the capital.
The Fund is closing the funding gap between crowd funding and traditional venture capitalists in the start-up technology sector allowing investors to benefit from its significant organic growth potential. The Fund aims to raise £15 million in subscriptions between now and 31 March 2015. It has a minimum investment of £25,000, and will aim to build a balanced portfolio of up to forty high growth technology companies in areas such as FinTech, e-Commerce, Artificial Intelligence (AI) and Life Science. The Fund offers investors substantial portfolio risk reduction through SEIS and EIS tax efficient schemes.
Access to technology start-ups has, until now, primarily been granted to venture capitalists – even the few investors that do have access early on can struggle to create a diversified portfolio without running into high costs. As an individual investor the entry point has often really only been at the IPO stage. By then the majority of the wealth has potentially been created from high valuations based on large cash-on-cash multiples, reaching in the 100’s to 1. Having recognised a gap in the market place Force Over Mass Capital LLP was founded to provide investors with the opportunity to invest at an early stage in fast growth technology companies.
Over the past fifteen months, Force Over Mass Capital had conducted extensive research of the technology market space in the UK and beyond, and has developed strategic relationships with a network ofmajor accelerators, incubators, venture capitalists and angel investors in the UK, who will act as deal flow providers,and consequently has a strong pipeline of potential investee companies in its sights.
The Fund’s investment strategy aims to deliver both capital preservation as well as growth which, has historically been a challenge for most SEIS/EIS funds. The firm’s team of investment experts will measure risk using an algorithm that looks at the businesses’ founders, their market potential and propositions. Risk will be further mitigated by creating a diversified portfolio of the current technological innovations of both hardware and software. The team’s investment approach will be based on implementing a conviction trading strategy through staged investments in the strongest companies within the portfolio. Investment will be three phases, with an initial injection ofbetween £50k and £125k. Two further tranches would typically follow to build market share, extend product range and streamline the business model. In addition to the funding, the investee companies will be given tailored support through accelerator and incubator programmes and will have access to Force Over Mass Capital’s global network of high profile mentors.
Force Over Mass Capital’s CEO Martijn de Wever said: “London is now Europe’s capital of technology as it continues to attract record numbers of UK and foreign technology firms, and has the potential to build a new economic powerbase to reduce the City’s historic dependence on financial services.Technology is arguably the UK’s fastest growing sector and the investment opportunity offered by Force Over Mass Capital’s EIS SEIS Fund is highly attractive for investors who are keen to find income while managing risk in a near zero interest rate environment. In addition as the subscription period will fall around the end of the tax year and the beginning of the next, the Fund may also appeal to those savers, who from 6 April 2015 when Pension Freedom reforms come into force, will be able to drawdown on their pension potsand may wish to reinvest some of these funds to maximise their savingsin a tax-efficient vehicle in an exciting growth sector.”
“The Fund has been designed for innovative, technology start-up businesses, seeking capital,who view the UK as an attractive and collaborative place to launch and grow their business and therewith add value to the economy,” added de Wever.
Roger Blears, Board Member of EIS Association, the independent body which assists in the flow of capital and resource available to British small to medium-sized enterprises through EIS and SEIS commented: “The Force Over Mass Capital SEIS EIS Fund presents a terrific opportunity for high net-worth investors to join forces with the well-connected and tech savvy Force Over Mass Capital team and leverage their access to the global technology companies of tomorrow. Investing in tech can be a risky business but the returns can also be stunning. SEIS relief allows investors entitled to the full tax reliefs to invest a £1 for a net opportunity cost after full tax reliefs of only 13.5 pence – that’s tech investing with real turbo power.”
Aimed at high net-worth investors, the Fund is targeting a return £5.00 – £10.00+ for every £1.00 invested with a five to seven year investment horizon. The combination of a risk mitigated approach with the “super–growth” technology sector presents a rare opportunity in the SEIS/EIS space. By using SEIS/EIS tax reliefs and diversification Force Over Mass Capital has de-risked a traditionally risky investment in a smart way.
If the Fund’s investments have been held for two years at the time of an investor’s death, these investments will be exempt from inheritance tax.
- The Subscription Fee is 4%. Investors do not pay a Management Fee.
- The Offer period – the Fund will close between the end of this tax year and the beginning of the next.
- The minimum investment is £25,000.
- The Fund has a 20% performance fee once the subscription has been returned to the the investor. An enhanced fee of 30% will be applied for a total return in excess of £1.20 per £1.00. This additional 10% will be allocated to Force Over Mass Capital’s network of ‘Super Mentors’ who will help the start-up companies take their businesses to the next level.