SyndicateRoom has launched a new Enterprise Investment Scheme (EIS) fund designed to bring a portfolio approach to investment in early stage companies.
Fund Twenty8 was developed and named based on industry research into early stage investment performance. Research by Intelligent Partnership suggested minimum portfolio size should hold at least 28 companies.
Traditional EIS funds generally only invest in between five and ten investments per fund and usually focus on a single sector. With Fund Twenty8, investors get access to a much larger portfolio of investments, across a broad range of sectors.
The fund automatically tracks and matches the investments made by SyndicateRoom members, staking their own capital, to define how much capital is allocated to each investment. This is done on a £ for £ basis until the company’s funding target is met. If an investment is oversubscribed and goes into overfunding, the fund then invests more, securing a larger weighting.
Investment in Fund Twenty8 is available to retail investors, SyndicateRoom members and institutional investors, with eligible private individuals benefiting from EIS tax benefits. These include:
Gonçalo de Vasconcelos, CEO and co-founder commented: “Our mission at SyndicateRoom has always been to provide online investors with fair and transparent access to the high-growth investment opportunities the professionals are investing in. Fund Twenty8 is SyndicateRoom’s latest innovation as another step along that journey. We’re harnessing technology to achieve a unique way to deploy capital alongside business angels and VCs – the more interest from investors, the more the fund deploys.”
James Sore, Chief Investment Officer at SyndicateRoom, said: “Investors want choice - and we have a proven track record in providing that. Now we’re catering to the passive investors who prefer a portfolio approach to investing but don’t want to pay the hefty management fees that usually come with it. This new product offers a diversified portfolio to our investor community, while providing an even stronger route for companies to seek growth capital.”
The fee structure for the fund is an initial 1 percent on subscriptions with a flat 1 percent annual management charge. SyndicateRoom then only charges carry when investor returns exceed the hurdle rate of £1.10 returned for every £1 invested from the fund.
The carry is 20 percent on the portfolio return, rather than on a deal by deal basis. This is intended to help provide added security to the investor, by keeping the annual management charge low.