Blackfinch Spring VCT

Blackfinch Spring VCT is managed by Blackfinch Ventures, a tax-efficient investment house with £660 million assets under management. 

The VCT was launched in 2020 to take advantage of follow-on opportunities and deal flow Blackfinch Ventures considers too mature for its EIS fund. It targets tech-enabled businesses operating predominantly in the B2B market.

The VCT has net assets of £11.8 million, of which £6.3 million is invested in a portfolio of 14 early-stage companies. £5 million is currently held in cash (December 2021).

  • Seeking to raise up to £20 million with a £10 million overallotment facility
  • Initial dividend target of 5% from 2024 (not guaranteed)
  • Invest in the 2022/23 tax year
  • Minimum investment £3,000, you can apply online
  • Final deadline for 2022/23 tax year: 18 August (5pm)

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 then apply

The manager

Blackfinch Group was founded in 2004 by Richard Cook. The business has over £660 million under management (as at May 2022). 

The group launched its first EIS fund in 2015 and focused on asset-backed or media investments, which are no longer permitted under current investment rules. Blackfinch has since made changes to its team and launched Blackfinch Ventures to help it transition towards growth-style investments. Blackfinch Ventures has over £54 million under management (May 2022).

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. 

Meet the manager: Watch a video interview with Reuben Wilcock, Ventures Director at Blackfinch:

 

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. 

Current portfolio overview

The VCT has net assets of £11.8 million, of which £6.3 million is invested in a portfolio of 14 early-stage companies and £5 million is currently held in cash (December 2021). 

The portfolio is currently invested across a variety of distinct technology sectors, ranging from sleep and workplace wellbeing to marketing and business supply chain management. There is also a strong focus on B2B exposure, making up 77% of the current portfolio. Only one company (Kokoon) has an exclusively B2C focus.

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.

Odore – Blackfinch Spring VCTOdore

Odore is a customer insight platform which aims to improve marketing for physical samples.

The business primarily targets the beauty industry and already includes brands such as L’Oréal, Dior, and Sephora on its books. Through its platform, Odore gives companies the tools to track and measure the efficacy of campaigns, as well as running hyper-personalised marketing to customers. 

Odore caters to everything from small boutiques through to advertising agencies. It offers its clients access to campaign builders, customer analytics and end-to-end fulfilment using its own international network of distribution centres. 

Blackfinch invested £430,000 into the business in December 2021. 

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 5.5% of the VCT’s net assets.

Exit track record

To date, the VCT has not achieved any positive exits, although the portfolio is still relatively young.

However, as can be expected, not all investments work out. One example is Movebubble Ltd.

Movebubble Ltd

Movebubble was a rental app that aimed to tackle some of the biggest issues renters have when searching for new homes. Rather than spending hours dealing with bad landlords and estate agents, the platform helped renters search through thousands of properties, see video walkthroughs of potential homes, and make offers 24/7.

While the business initially performed well during the first lockdown it suffered in the second, leading to the departure of the founding CEO. Blackfinch supported the company in appointing a new CEO and provided a small additional investment to fund a recovery plan. However, despite good progress, revenue continued to decline, and the company could not secure a rescue deal.

The company appointed a liquidator in May 2022, resulting in a loss of the full investment value of £0.55 million for the VCT. 

Performance and dividends

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

Please note, this is a relatively young VCT so its track record is still limited. Past performance is not a guide to the future.

Source: Morningstar. Past performance is no guide to the future. Dividends are variable and not guaranteed. The bar chart shows net asset value and cumulative dividends per share for the period 31 Dec 2016 – 31 March 2022.

Dividend reinvestment scheme

There is no dividend reinvestment scheme. 

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). 

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.

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, offer price and share allotment calculation methodology.

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
Wealth Club initial saving 3%
Existing shareholder discount 1%
Net initial charge through Wealth Club (new investors) 2.5%
Net initial charge through Wealth Club (existing shareholders) 1.5%
Annual management charge 2%
Annual administration charge
Performance fee 20%
Annual rebate from Wealth Club (for three years)

More detail on the charges

Annual rebate when you invest through Wealth Club

There is no annual rebate for Wealth Club investors.

Deadlines

  • Deadline for receipt of applications for final allotment in 2022/23 tax year: 18 August 2022 (5pm)

Our view

The VCT has made good progress in developing its portfolio in the two years since it launched. Its net assets now stand at £11.8 million and the portfolio has grown to 14 investments with a consistent focus on tech-enabled businesses operating in the B2B market. 

The team’s ability to maintain its rate of deal flow while sticking closely to its proposed strategy is encouraging and has likely been supported by co-investment and follow-on opportunities from Blackfinch’s EIS service.

While it may still be too early to draw conclusions on the merits of this offer, Blackfinch has a track record of being able to both attract and deploy capital efficiently. However, please note, this is still a young VCT, so concentration risk is likely to be higher while it continues to build out its portfolio. 

Read important documents and then apply

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. 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
3% (4% existing investors)
Net initial charge
2.5% (1.5% existing investors)
Annual rebate
-
Funds raised / sought
£7.0 million / £20.0 million
Deadline
18 Aug 2022 (5pm) for 2022/23 allotment
Last updated: 6 June 2022

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