Don't invest unless you're prepared to lose all the money you
invest. This is a high-risk investment and you are unlikely to be
protected if something goes wrong.
Take 2 mins to learn more.
Don't invest unless you're prepared to lose all the money you
invest. This is a high-risk investment and you are unlikely to
be protected if something goes wrong. Take 2
mins to learn more.
×
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
1. You could lose all the money you invest
• If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
2. You are unlikely to be protected if something goes wrong
• Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
• Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
3. You won’t get your money back quickly
• Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
• The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
• If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
4. Don’t put all your eggs in one basket
• Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
• A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
5. The value of your investment can be reduced
• The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
• These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.
If you are interested in learning more about how to protect yourself, visit the FCA’s website here.
EIS Investments
When you invest in young, small companies that qualify for the Enterprise Investment Scheme (EIS) you could generate significant returns if the company prospers.
But that’s far from certain. Investing in this
kind of business is risky and many will fail. Therefore, to encourage
investment and to temper some of the risk, the government offers generous EIS tax reliefs:
Save up to 30% on your income tax bill – up to £300,000 per year (or £600,000 when investing in knowledge-intensive companies)
Very generous allowance – up to £1 million (or £2 million if anything above £1 million is invested in knowledge-intensive companies)
Enjoy tax-free growth
Defer capital gains from other investments – potentially indefinitely
Offset any future losses against your income, so you save income tax
Pass on your investment free of IHT
Remember, tax rules can change and tax benefits depend on circumstances.
See all our current EIS offers below. You can filter by type: fund, or single company. If you're interested in an offer you cannot see here, please get in touch.
The Scale-up EIS fund is one of two EIS funds from Fuel Ventures. It seeks to make investments into early-stage digital businesses operating in three key areas: marketplaces, platforms, software as a service. The fund is managed by successful entrepreneur-turned-investor Mark Pearson.
The Guinness EIS fund looks to offer scale-up capital to businesses that are already generating revenue, preferably £1 million or above, not guaranteed.
Collaboration between Imperial College, one of the world's top universities, and specialist investor Parkwalk Advisors, investing in university spinouts.
Parkwalk Advisors is one of the UK’s most active investors in university spinout companies. The fund looks to back patented technology with commercial potential from UK universities.
The British Robotics Scale-Up Fund looks to invest in the most promising companies from the British Robotics SEIS Funds in the manager’s view. This offer will target businesses operating purely within the UK robotics sector, with a particular emphasis on automation technology.
Foresight Group has joined forces with WAE, a spinout of Williams Grand Prix Engineering. The fund invests into early-stage, unquoted companies that can benefit from WAE's technical, engineering and commercial expertise.
Evergreen EIS fund targeting regional businesses in the North, managed by a large and experienced venture capital team, focusing on technology and healthcare.
This fund seeks to provide follow-on funding to what Fuel Ventures considers to be the strongest performing companies from its SEIS and Scale-up EIS funds.
The MMC EIS Fund focuses on technology-enabled businesses. For instance, it invests in financial and business services, digital media, ecommerce and software solutions for business.
EIS offering from the manager of Octopus Titan VCT. The Octopus Ventures team invests in some of the UK’s fastest-growing private technology companies.
Knowledge-intensive EIS fund managed by one of the UK’s leading venture capital teams. Because of the ‘KI approved fund’ structure, the investment date for income tax relief should fall in the current tax year.
The second knowledge intensive EIS fund from Par Equity, focusing on technology companies predominantly in Scotland, Northern Ireland and the North of England.
Knowledge-intensive (KI) approved EIS fund from Parkwalk, looking to back patented technology with commercial potential coming out of UK universities. The fund offers tax relief in 2023/24 with the option to carry back to 2022/23.
Which offers are attracting investors’ interest? Every Monday we look at the offers and articles Wealth Club members have viewed on our website the previous week. Then we compile the top ten across the different types ...
Funds raised by Venture Capital Trusts (VCTs) reached £882 million in the 2023/24 tax year, according to AIC figures just released — the third highest year on record. The sum, which includes dividend reinvestment, brings the ...
With the start of the new tax year, some taxes have gone up as planned, leaving high earners and investors feeling the pinch.In particular, capital gains and dividend allowances have been cut for the second year ...
I have been professionally involved with pensions for 24 years. I have lost count of how many times rules have changed over that period – usually not for the best. Yet, despite all the tinkering, overly ...
