Blackfinch Spring VCT

The Blackfinch Spring VCT first listed on the London Stock Exchange in April 2020. Its maiden fundraise (which closed in September 2020) raised £4.0 million from investors and its second, which closed in August 2021, raised c.£7 million. 

The VCT launched to take advantage of deal flow that Blackfinch considers too mature for its EIS fund. It may also offer a source of follow-on funding for any successful EIS investments.

The VCT has net assets of £10.4 million, of which £5.9 million is invested in a portfolio of 13 early-stage companies. £4.5 million is currently held in cash (September 2021). 

The current offer is seeking to raise up to £20 million with a £10 million overallotment facility. 

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest.

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Highlights

  • New VCT targeting growth capital investments in the technology sector
  • The portfolio has a large cash balance to deploy into new opportunities
  • Initial dividend target of 5% from 2024 (not guaranteed)
  • Aims to invest in 5-15 companies annually 
  • Invest in the 2021/22 and 2022/23 tax years
  • Minimum investment £3,000, you can apply online

The manager

Blackfinch Group was founded in 2004 by Richard Cook. The business has over £550 million under management (as at 31 August 2021).

The group launched its first EIS in 2015 and now has over £57 million in assets across its EIS and SEIS products, and £216 million in IHT Portfolios. The majority of these funds were launched before EIS rule changes and focused on asset-backed or media investments, which are no longer permitted. Blackfinch has made changes to its team and launched Blackfinch Ventures to help it transition towards growth-style investments. Blackfinch Ventures has over £30  million under management (June 2021). 

Blackfinch Ventures was established in 2017 and since April 2019 has been overseen by Reuben Wilcock, who previously worked as an IP specialist for the University of Southampton as well as founding and running the accelerator programme Future Worlds. Reuben is supported by a team of six  – as well as an in-house legal counsel. 

In addition, Blackfinch Ventures has its external network of Venture Partners: eight experienced senior professionals and entrepreneurs, who can provide deal flow and advice to the investment team, as well as serve as a non-executive director for investee companies.

Investment strategy

The VCT aims to invest in early-stage technology-enabled companies that have a strong focus on R&D and innovation and have already met milestones set in previous investment rounds. Companies will also need to show evidence of product-market-fit, often via revenue, and an ability to acquire new customers. 

Blackfinch intends to invest across a variety of sectors and stages of maturity, although Series A funding rounds are preferred. As the portfolio continues to develop, the trust is likely to favour follow-on investments within the VCT alongside co-investment opportunities with Blackfinch’s EIS Fund.

The VCT was launched to take advantage of deal flow that Blackfinch considers too mature for its EIS fund. It may also offer a source of follow-on funding for any successful EIS investments.

Deals will be sourced from Blackfinch’s distribution network as well as accelerator programmes such as Future Worlds. Blackfinch receives between 1,000-2,000 leads each year, from which the VCT is expected to select approximately 5-15 annually. 

Blackfinch spends time assessing companies’ financials, technology, and VCT eligibility. After investment, each company will be monitored by a non-executive director from Blackfinch’s network of Venture Partners selected for their relevant experience and industry connections. Blackfinch’s portfolio team will work together with NEDs to collect monthly financial and KPI data from the companies.

Exit track record

There have been no exits to date.

Covid-19 impact

The VCT made its first investment in September 2020. Whilst some of the companies appear to have been affected by the ongoing pandemic, all the VCT investments are currently held at cost (June 2021). 

Current portfolio overview

The VCT has net assets of £10.4 million, of which £5.9 million is invested in a portfolio of 13 early-stage companies and £4.5 million is currently held in cash (September 2021).  

The VCT  expects to invest in between 5-15 companies per annum, and to fully invest proceeds raised within three years. While the investment team will look to provide variety by spreading investments across different sectors and stages, investors should note that the VCT is still in the early stages of deployment and the portfolio is relatively concentrated.

Edozo – Blackfinch Spring VCTEdozo

Founded by entrepreneur Marcus Ginn, and chartered surveyor Andrew Peacock, Edozo has developed a ‘one-click’ mapping platform for the commercial property industry.

Based on feedback from developers, architects, and valuers, Edozo’s system is fast, accurate, and cost-effective. Unlike clunky legacy software, Edozo allows users to create boundary maps with a single click, producing 100% accurate freehold maps in seconds. Furthermore, this feature is linked directly to the Land Registry .The platform has already been adopted by more than 5,000 property professionals, including two of the UK’s biggest names in housebuilding, Bellway, and Berkeley Homes.

Blackfinch Ventures first invested through its EIS fund in 2019. The VCT then provided £0.2 million in follow-on funding as part of a £2 million round in August 2021. The investment will be used to help the company grow its market share, develop new products, and upscale the team.

Transreport – Blackfinch VCTTransreport 

Transreport is a technology platform for the travel industry. So far, the business has launched seven SaaS solutions, the most notable being its “Passenger Assist” application.

Previously, passengers would book assistance over the phone and transport staff relied on daily printouts to coordinate support. However, this system has significant limitations, particularly in the event of train cancellations, delays, or platform changes.

In contrast, Passenger Assist allows users to book, change, and cancel assistance quickly, create profiles to specify the type of assistance required, and provides staff with live information to accommodate changes at short notice. The service has proven popular and Transreport has already secured an exclusive, long-term contract with the British rail network.

In March 2021, Blackfinch invested £1.3 million into the company, of which £500,000 came from the VCT, as part of a £2.3 million round with Praetura Ventures. The funding will be used to accelerate expansion and explore routes into air, taxi, bus, and coach travel as well as European rail operators. Transreport accounts for 4.8% of the VCT’s net assets. 

Performance and dividends

Performance figures are not yet available.

The VCT targets a dividend yield of 5% from 2024, please note dividends are variable and not guaranteed.

Risks: important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

VCTs are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

To retain the tax benefits, VCTs should be held for at least five years. If you sell VCT shares and reinvest in new shares of the same VCT (including any mergers) within six months, tax relief can be restricted. Tax rules can change and benefits depend on circumstances.

VCTs can now only invest new money in growth capital deals. Management buyouts, replacement capital deals and investments in mature companies are no longer permitted. This results in considerably higher risks.

If the raise is smaller than expected, costs may have a larger impact than intended. Equally, the portfolio may initially be less diverse than anticipated.

Charges and savings 

A summary of the main charges and savings is shown below. The net initial charge shown includes the Wealth Club saving and any early bird discount. The investment may have additional charges and expenses: please see the provider documents including the Key Information Document for more details.

Please note, capacity – for the offer or any early bird savings – can be reached early, and we may not be notified of this by the VCT in real time.

Full initial charge 5.5%
Early bird discount 1.5%
Wealth Club initial saving 3%
Existing shareholder discount 1%
Net initial charge through Wealth Club (new investors) 1%
Net initial charge through Wealth Club (existing shareholders) 0%
Annual management charge 2%
Annual administration charge
Performance fee 20%
Annual rebate from Wealth Club (for three years)

More detail on the charges

Deadlines

  • Deadline for first allotment: 26 November 2021 
  • Deadline for 1.5% early bird discount: 27 January 2022 (5pm)
  • Deadline for 1% early bird discount and final allotment in 2021/22 tax year: 4 April 2022 (10am)
  • Deadline for receipt of applications for final allotment in 2022/23 tax year: 2 September 2022 (3pm) 

Share buyback policy

The Company may operate a buyback policy at a 5–10% discount to the latest published net asset value per share. This is not guaranteed – please see the offer documents for details.

As with all new VCTs, the directors of Blackfinch Spring VCT expect that there will be limited demand for share buybacks from Shareholders within the first five years because the only sellers are likely to be deceased Shareholders’ estates and those Shareholders whose circumstances have changed (to such extent that they are willing to repay the 30% income tax relief in order to gain access to the net proceeds of the sale).

Dividend reinvestment scheme

There is no dividend reinvestment scheme. 

Discount history

VCT shares are traded on the London Stock Exchange. Similar to investment trusts, the share price can fluctuate and can be different from the VCT’s net asset value (NAV), i.e. the value of the VCT’s underlying investments. The difference between the share price of a VCT and its net asset value per share is called a discount.

Investors should note the VCT has less than a five year track record. Trading of the VCTs shares will be immaterial and any consideration of the share price movements in relation to the net asset value per share will be inconclusive. The discount history chart will be published once the VCT has a five year track record.

Investors looking to sell their VCT shares may get a better price using the VCT’s share buyback facility, although this is not guaranteed.

Annual rebate when you invest through Wealth Club

There is no annual rebate for Wealth Club investors.

Our view

In our view, it is too early to draw conclusions on the merits of this VCT offer. Blackfinch Group launched its Ventures business in 2017. The service is headed up by Reuben Wilcock, who joined in 2019, Reuben is supported by a team of six, as well as Blackfinch Ventures’ venture partner network.

To date, Blackfinch Ventures has attracted over £30 million of capital across its EIS service and VCT (June 2021) and has made investments into 19 investee companies, of which 13 are held within the VCT. The core team has been working together for only a limited period. However, within its EIS service, Blackfinch has so far been able to both attract and deploy capital efficiently.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

The details

Type
Generalist
Target dividend
5% from 2024
Initial charge
5.5%
Initial saving via Wealth Club
4.5% (5.5% existing investors)
Net initial charge
1% (0% existing investors)
Annual rebate
-
Funds raised / sought
£84,000 / £20.0 million
Deadline
26 Nov 2021 for first allotment
Last updated: 8 September 2021

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