Nova Cofoundery SEIS & EIS Fund is a fund that aims to invest in 10 companies that are eligible for SEIS or EIS relief. The target return for each investee company is a three-year return of £2.18 after tax relief for each £1 invested (although investments are expected to be held for 5-7 years). Returns will be focussed 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 newly formed companies, with strong support provided before and after investment.
- Volume of investments: While Nova has tested it ability to scale its sourcing, a full fundraise will require a faster rate of investment than achieved so far.
The investment advisor
- Team: The experienced management group has spent 10 years honing its methodology, supported by a large team of specialists.
- Past performance: While the team has produced an impressive IRR on an unrealised basis, there have only been two exits to date.
Nuts & bolts
- Offer period: The fund is evergreen, with deployments in April and October.
- Diversification: Mixture of SEIS and EIS investments. The aim is to invest in 10 companies with higher weights in the EIS investments.
- Valuation: Investors will receive four valuations a year. Industry guidelines will be used.
- Fees: All fees apart from the performance fee are charged directly to companies.
Performance fee: 20% on gains over a return of 150% of total capital invested.
- Risk mitigation: Nova’s focus is on using the support it provides to mitigate the investment risk of investing in new start-ups. There is some evidence this is effective.
- Target return: Overall, as is normal for (S)EIS funds, the strategy is high risk, with the three-year return target of £2.18 (including tax relief), though this is effectively understated due to the expected five-to-seven year holding time for investments. Individual investments will have a higher target, offset by a proportion of failures.