£25m to be raised

ESM switches fund after Budget changes

Steven Morris

Steven Morris: even more incentives (photo by Terry Murden)

Changes in the Budget have forced a change of plan at ESM Investments, the Stirling-based backer of early stage companies.

The company had announced in September that it was launching a venture capital trust.

But after changes unveiled by Chancellor Philip Hammond in November, ESM is now planning a £25 million Enterprise Investment Scheme qualifying technology Fund

The switch has been made because of the increased attractiveness of EIS for its investors and the companies recipient companies against poorer conditions attaching to VCTs.

Steven Morris, founder & CEO at ESM Investments, said: “The Chancellor has provided investors in EIS qualifying shares with even more incentives than before.

“An EIS or VCT qualifying investment and the type of companies that we invest in are not for everyone – as with all investments they carry risk to capital.

“The ESM EIS Fund will be anchored from headquarters in Stirling and will invest in Scottish and UK registered ‘scale up’ businesses at pre-Series A round stage.

“We have already had several significant notes of investor interest in our plans and really look forward to presenting to additional investors in early 2018.” 

Series A is the first significant round of financing for outside investors after company founders, employees, friends and family and angel investors.

EIS and VCT schemes are designed to encourage private individuals, through attractive tax relief, to invest in small, higher-risk firms in need of expansion capital.  

Knowledge-intensive companies (university spin outs, life science and technology companies) will have better access to growth capital. They are able to receive up to £10 million in EIS funding in one year (twice the previous limit).

For individual investors, the annual EIS allowance will double to £2 million when investing in knowledge-intensive companies. 

The introduction of a new principles-based test to ensure companies that receive VCT and EIS investment are proper entrepreneurial businesses.

  • Full Circle Partners, the investment advisory firm co-founded by Mike Welch of Blackcircles.com has launched a property fund to provide short-term investment support to established commercial and residential property developers.

FCP Property Development Fund will be run by Matthew Edgar, a long-time adviser to Welch, and will provide loans from £250,000 to £2.5m. It has already invested approximately £6m and could raise that to £20m within the next 12 to 18 months.

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