Blackfinch Spring VCT

1.5% early bird discount: deadline 28 January 2021 (3pm)

The Blackfinch Spring VCT is a new VCT which 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 made one investment. 

The VCT has been 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 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.

Read important documents and apply

Highlights

  • New VCT targeting growth capital investments in the technology sector
  • Predominantly a portfolio of cash to deploy into new opportunities
  • Initial dividend target of 5% from 2024 (not guaranteed)
  • Aims to invest in 5-15 companies annually 
  • Invest in 2020/21 and 2021/22 tax years
  • Minimum investment £3,000, you can apply online

The manager

Blackfinch Group was founded in 2004 by Richard Cook. The business has £420 million under management (September 2020).

The group launched its first EIS in 2015 and now has over £55 million in assets across its EIS and SEIS products, and £190 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 £15.6 million under management (July 2020). 

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 three investment professionals – one investment manager and two analysts – as well as an in-house legal counsel.

Investment strategy

The VCT has been 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 will target young, growing companies: the key difference is the stage at which they invest, with the VCT targeting more mature businesses in need of scale-up capital.

Deals will be sourced from Blackfinch’s distribution network as well as accelerator programmes such as Future Worlds.

Blackfinch’s vetting process means it spends a significant amount of time assessing and interviewing the founders before moving to a term sheet. After investment, each company will be monitored by a non-executive director who is selected by Blackfinch for their relevant experience and industry connections. 

Exit track record

As this is a new offer, performance data is not yet available.

Covid-19 impact

As this is a new VCT, which made its first investment in September in 2020, there is no existing portfolio that could have been affected by the Covid-19 crisis. It is, however, conceivable that the current situation could cause delays and pose challenges in sourcing and finalising deals – this is something with which all VCTs need to contend.  

Current portfolio overview

The VCT has raised £4.0 million from investors following its first offer, which closed in September 2020. As at 1 September 2020, the VCT made its first investment into Movebubble Ltd for £400,000. Details are shown below.

The VCT is expected to use the proceeds raised in this offer to invest in between 5-15 companies per annum, and to fully invest proceeds raised within three years. Should a lower amount be raised, the manager intends to scale down the amount invested per company, so as to still offer investors some diversification – however please note this is not guaranteed and as a new VCT currently making its first investments, investors have exposure to a limited number of investee companies. The investment team will look to provide variety by spreading investments across different sectors and stages. The anticipated holding period is between four to seven years although timeframes cannot be guaranteed.

Movebubble – Blackfinch Spring VCTMovebubble Limited

Movebubble is a mobile property app for the housing rental market. The company has developed technology which it believes makes the process of looking for a new place fun and engaging. Users can view ‘video walkthroughs’, which use similar technology to popular social media apps, to better understand the quirks and details of each property. This video technology resulted in a 1,300% increase in engagement compared to standard rental listings. Today, Movebubble claims to have attracted 500,000  users to the app and has more than 30,000 properties listed in Manchester and London.

The company has recently launched the ability to transact holding deposits directly through the app. Besides letting and transactional fees, Movebubble shares its data with build-to-rent developers, helping them build high-yielding properties. 

The Blackfinch Spring VCT invested £400,000 into the business in September 2020. The Blackfinch EIS Portfolio service has also invested £1.1 million into the business. 

Kokoon – Blackfinch Spring VCTKokoon (an example of a company backed by Blackfinch Ventures EIS)

Kokoon was founded by Tim Antos to solve a vexing but common problem – to help people sleep. An insomnia sufferer himself, Mr Antos was recommended audio techniques after visiting a sleep clinic. Whilst the audio worked, it was difficult to find headphones that were comfortable enough. Unsatisfied, Mr Antos designed Kokoon headphones.

Kokoon headphones are wireless, noise-cancelling and cushioned. Collectively, the company produced over 200 prototypes to get the ergonomic design correct. In recent years, the product has been developed to integrate sleep tracking software into the headband. This allows the headphones to track R.E.M. cycles and determine the best period to play audio to promote sleep or function as an alarm.

The company has already shipped over 15,000 products, delivered over £4.5 million in sales and has distribution links with high-street retailers such as Selfridges. Blackfinch Ventures EIS service, which aims to invest in similar kind of deals as the VCT,  invested a total £1.5 million into the business. 

Performance and dividends

This is a new VCT, so 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. 

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.

This is a new VCT. If fundraising is slow, shares may take some time to be allotted. 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.

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

  • 1.5% Early Bird Discount deadline: 3pm 28 January 2021
  • 1% Discount deadline: for all applications received before 3pm 1 April 2021
  • 2020/21 tax year deadline: 3pm 1 April 2021
  • 2021/2022 tax year deadline: 3pm 30 September 2021 

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.

Dividend reinvestment scheme

There is no dividend reinvestment scheme. 

Annual rebate when you invest through Wealth Club

There is no annual rebate for Wealth Club investors.

Our view

This is a new VCT offer and, 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. To date, Blackfinch Ventures has attracted £15.6 million of capital overall (July 2020) and has made investments into 13 EIS-qualifying companies. 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
£680,000 / £20.0 million
Deadline
28 Jan 2021 for early bird
Last updated: 5 October 2020

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