Blackfinch Spring VCT

The new Blackfinch Spring VCT is raising up to £20 million with an additional £10 million overallotment facility. 

Highlights

  • New VCT targeting growth capital investments within the technology sector
  • Initial dividend target of 5% from 2024 (not guaranteed)
  • Aims to hold a portfolio of 10-20 companies
  • Choose between investment in 2019/20 and/or 2020/21 tax years
  • Minimum investment £3,000 – you can apply online

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

The manager

Blackfinch Group was founded in 2004 by Richard Cook.

It launched its first EIS in 2015 and now has over £50 million in assets across its EIS, SEIS and IHT products. The majority of these funds were launched before EIS rule changes and focused on asset-backed or media investments which no longer qualify. Blackfinch has made changes to its team to help it transition towards growth style investments.

The Blackfinch Ventures team 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.

Watch a video interview with Reuben Wilcock, Ventures Director:

Investment strategy

The VCT has been launched to take advantage of deal flow that Blackfinch consider 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.

Current portfolio overview

If the current fundraising offer is fully subscribed, the VCT is expected to target a portfolio of 10 to 20 companies with an average investment of £1 million. 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. 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.

As the VCT is yet to make an investment, the example companies below are from the Venture EIS portfolio. Investments made by the VCT may be different.

Tended – Blackfinch Spring VCTTended

While working in Nepal, Leo Smith received news that his mother had suffered an accident at home in the UK. Fortunately, it was not serious. As she lived alone it could have been far worse if she had been unable to call for help.

This inspired Mr Smith to design Tended Protect, an intelligent personal safety device. Similar to a smartwatch, Tended uses sensors to monitor movement and automatically detects abnormalities which can indicate an accident. Under such circumstances a user will be prompted to ‘check-in’. If they fail to do so the device will send an alert to their emergency contacts.

Tended originally targeted the consumer market but has subsequently added a corporate model for businesses looking to improve safety conditions for lone and remote employees. The device is currently being trialled by a number of global brands as well as leading insurance companies.

Blackfinch invested in a £1.15 million funding round alongside Innovate UK. The funding will be used to expand the team and improve research and product development.

Kokoon – British Design Fund EISKokoon

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 invested £540k in August 2019. 

Performance and dividends

The VCT will target a dividend yield of 5% from 2024, please note dividends are variable and not guaranteed. This is a new VCT, so performance figures are not yet available.

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, or may not be allotted at all – the VCT needs to raise a minimum of £3 million to allot. 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.

Fees and charges

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
Net initial charge through Wealth Club (new investors) 1%
Net initial charge through Wealth Club (existing shareholders) 1%
Annual management charge 2.5%
Annual administration charge
Performance fee 20%
Annual rebate from Wealth Club (for three years)

More detail on the charges

Deadlines

  • Early bird saving of 1.5% available for applications received by 3pm on 31 January 2020.
  • Please note, the VCT will have to raise at least £3 million before the first allotment takes place. 

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 re-investment scheme. 

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%
Net initial charge
1%
Annual rebate
-
Funds raised / sought
£20.0 million sought
Deadline
31 Jan 2020 for early bird saving
Last updated: 11 November 2019

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