EIS award winner launches fund specifically aimed at young investors

Written by Ray Clancy

Tuesday, 23 March 2010 09:31

A new fund is being launched specifically aimed at young investors who can benefit from EIS tax relief.
It will be open to any 18 to 25 year old who has £2,500 or more to invest venture capital as an asset class through MMC Ventures. To encourage investment it is waiving its usual management fees and subscription cost.

The Fund, which benefits from EIS tax relief, provides priority access to invest in MMC’s pool of fast growing UK companies, according to Rory Stirling, investment manager at MMC.

‘We felt that there was a gap in the market for a fund that encourages the younger generation to look at investing for their future. Venture capital has typically only been open to high net worth individuals with over £25,000 to invest,’ he said.

‘The younger generation is a vital source of deal flow for us, a pool of talent available to fill gaps in the management teams of our portfolio companies and it provides prime strategic input into emerging trends in the new economy. Now is a good time to have the opportunity to access such an exciting asset class,’ he explained.

He added that funds invested during previous downturns have produced above average returns for investors. ‘Our EIS tax reliefs mean that the most an investor risks is 48% of capital invested at a 40% tax rate, falling to only 40% at a 50% tax rate,’ said Stirling.

He said the fund is looking to fund businesses that operate in high growth sectors and where MMC’s involvement will accelerate growth.

‘This is a unique proposition designed for the entrepreneurial leaders of the future and we are confident that savvy investors will put their money into our Growth Generation Fund,’ added Stirling.

The Growth Generation Fund is structured as an unapproved EIS fund. The Fund comprises a pool of money managed by MMC on a discretionary basis and will be closed to new subscriptions as of 1st July 2010. MMC said it will invest the fund in at least four companies, within 12 to 18 months, to create a portfolio of EIS-eligible companies. These investments include both new deals and follow-on funding rounds for existing investee companies.

Founded in 2000 by Bruce Macfarlane, Alan Morgan and Alan Cockell, MMC initially invests between £500,000 and £2 million of capital in fast growing UK businesses that have already demonstrated market acceptance of their proposition.

All investments are made on strict commercial merits whilst retaining substantial tax advantages for UK tax resident investors under the EIS Scheme. MMC currently has £70 million under management through a combination of managed funds and a syndicate of experienced private investors, and aims to invest £8 to £10 million each year in a range of new deals and follow-on funding.