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Why invest

Positives

  • Strategy: Exposure to a portfolio of technology companies that have a social impact core to their strategy.

Issues

  • Track record: Although BGV has invested in 127 companies, there have only been a couple of successful exits to date.

The Investment Manager

Positives

  • Team: The team is experienced, having been managing social impact investments since 2012.

Issues

  • Team size: The team is small, and this may act as a slight constraint, although the use of an external mentoring team mitigates this.

Nuts & bolts

  • Duration: The Fund will close on 3 April 2020. Bethnal Green Ventures (BGV) guides that exits will take seven to ten years.
  • Diversification: The manager aims to provide more than 20 investments with a minimum of 10. These will be spread across different stages of company progress and sectors.
  • Valuation: Usually changes at next financing or on write-down.

Specific issues

  • Fees: Simple fee structure with investors paying an upfront fee and no annual charges.
  • Performance fee: Charged at 20% on aggregate returns over 110% of subscription.

Risks

  • Target returns: The target return of £2 for each £1 invested 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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