What is the minimum and maximum amount I can invest in the fund?
- The minimum investment amount is €10,000, and you can invest in increments of €1,000 thereafter. The maximum investment amount is €250,000.
Can I roll forward any unused relief?
- Yes, unused relief can be rolled forward subject to certain limits.
What is the target return of the investment?
- The investment focuses on capital preservation with a target return of 170% (including tax relief).
How and when can I claim tax relief?
- Investors can claim tax relief using the Designated Fund Reference Number.
The target relief for the fund is 30-33%. This can be done either through tax certificates for the fund’s individual investments once made, or the consolidated certificate of qualification once all investments are completed. You can claim tax relief for the year of investment or the year in which the capital is deployed by the fund manager.
On what income can I claim relief?
- Eligible taxable income includes self-employed and PAYE earnings, rental income from personal property, bank deposit interest income, and ARF distribution income.
What fund is used for the investment?
- To diversify and reduce risk, a Regulated EIIS fund is used, specifically the BVP EIIS fund.
How has the fund performed historically?
- Performance for the 12 funds from 2008 to 2020 ranged between approximately 105% to 165% of capital invested. This includes tax relief and the book value of investments as verified by each fund's auditors.
What are the fees associated with this investment?
- There's a once-off fee of 3% of the investment amount payable to the Manager of the Fund at the time of investment. This fee does not qualify for tax relief.
How can I proceed with the investment?
All required documentation can be completed electronically. If you're interested, further details can be provided
Are there any risks I should be aware of?
- If you invest in this product, you may lose some or all of the money you invested.
- The value of your investment may go down as well as up.
- EIIS companies may be sold before the minimum holding period ends, meaning a potential clawback of tax relief.
Investing in private companies, especially startups and small businesses, can offer high potential returns but comes with its own set of risks. Here are the main risks associated with such investments:
Liquidity Risk: Unlike publicly traded companies, shares of private companies cannot be easily sold or traded on public exchanges. This means that an investment in a private company can be hard to liquidate.
Lack of Transparency: Private companies are not subject to the same rigorous financial reporting standards and regulations as public companies. This can result in less transparency for investors regarding the company's financial health, operations, and performance.
Business Risk: Private companies, especially newer ones, may have unproven business models. They might face challenges like strong competition, lack of customer acceptance, or operational inefficiencies.
Management Risk: The success of a private company often hinges on its management team. If the team lacks experience, makes poor decisions, or if there's internal conflict, the company's performance can suffer.
Financial Risk: Private companies might have limited access to additional capital. If they run into financial difficulties, they might have trouble securing more funding.
Market Risk: The market or sector in which the company operates may experience downturns or become less favourable due to economic, regulatory, or technological changes.
Regulatory Risk: Changing regulations in the sector could adversely affect the business. For startups, especially in new industries, regulatory environments can be uncertain.
Dilution Risk: If the company issues more shares in the future (e.g., in future investment rounds), the percentage ownership of earlier investors can decrease, or get "diluted."
Limited Historical Data: Newer private companies have limited track records, which can make it challenging to assess the company's potential for success or failure.
Technological Risk: In technology-driven sectors, rapid technological changes can render a company's products or services obsolete.
Reputation Risk: Any negative publicity or operational missteps can severely damage the reputation of the company, affecting its market position and profitability.
Exit Risk: Investors typically expect returns from either selling their stake (possibly when the company goes public) or from the company's acquisition. However, there's no guarantee the company will undergo an IPO or be acquired.
Dependency Risk: Some private companies might rely heavily on a single client, supplier, or employee. Loss of such dependencies can jeopardise the company's operations.
Competitive Risk: The business landscape is dynamic. New competitors can emerge, and existing ones can innovate, potentially taking away market share from the company.
Economic Risk: Broader economic downturns or crises can affect the demand for a company's product or service, leading to decreased revenues.
Remember, while these risks highlight potential challenges, many investors are drawn to private companies because of the opportunity for significant returns. As with all investments, it's crucial to do thorough due diligence and understand the specific risks associated with a particular company or sector before committing capital.
If you have more questions or need further clarification, please contact us.
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