Skip to main content

Lifting the bonnet on VCT & EIS investment

Lifting the bonnet on VCT & EIS investment

Seneca Partners’ annual adviser roundtable lifts bonnet on VCT & EIS investment

Investors need clarity on valuations, exits and fees to make informed choice

Seneca Partners (“Seneca”), the specialist SME investment business based in the North West, has published a whitepaper on VCT and EIS investment, resulting from an annual roundtable with advisers, reviewers and media at the end of last year. The full whitepaper written by Scott Longley at Clear Concise Media is available here.

An unequivocal conclusion is that the future looks bright for VCT and EIS investment, as the need to encourage innovation and entrepreneurship in the British economy is as vital as ever. Recent government reassurances around the regulatory backdrop for tax-advantaged investments should see investment in VCTs and EIS continue their growth path despite the economic headwinds.

However, the discussion did highlight some key areas where ambiguity is caused by differences of approach between providers, making the selection process for advisers and investors less straightforward and transparent than it could be.

Issues around investment time horizons, diversification, investor involvement and liquidity all have to be understood by both the adviser first and then explained to the investor.

Equally important for the adviser to fully understand are the clear differences in approach on the part of providers. From questions about investment process through to the nuances around valuations, exits, AIM investment and fees, investors and advisors need to be aware of the many aspects of what any given provider offers before making an informed decision.

Attending the roundtable Hugh Rogers, Director at the Tax Efficient Review discussed the effort to measure how funds are performing, citing track record and profitable exits; “We put weight on that. But we also take time to understand what has driven their valuations.” On the issue of valuations of the underlying investments he noted that AIM company valuations are “easy”, whereas with unquoted companies it can be a “minefield”. Of the measurement metrics he uses he went on to add; “Lastly it will be fees. We don’t like to see performance aligned to NAV; rather it should be aligned with returns to investors.”

It is clear that VCT and EIS continue to be a vital source of crucial funding to support the growth of British enterprise. Those looking to put their money to work within a VCT or EIS need to find a provider that is closely aligned with the drive for economic growth.

Richard Manley, CEO at Seneca Partners concluded: “VCT and EIS provide vital growth investment and support to the UK’s SMEs, which is crucial as we seek to return the UK economy to a period of sustained economic growth. The roundtable provided the opportunity to hear from advisers and reviewers on the issues investors need to consider in order to make an informed investment decision.


Contact Us

Online form

If you have any questions about anything you’ve seen on our website then please get in touch. We are here to help. Normal office hours are weekdays 9.00am to 5.00pm. The office is not open on weekends or bank holidays.
  • Hidden
  • Before submitting this form, please confirm that you have read and agree with our website Terms & Conditions

  • This field is for validation purposes and should be left unchanged.