WE ARE VENTURE CATALYSTS

NOVO WORKS WITH DYNAMIC & DISRUPTIVE VENTURES ACROSS THE MIDLANDS TO SUPPORT DEVELOPMENT, DRIVE GROWTH AND REDUCE RISK

Are you a professional investor
looking at Midlands based ventures?

Are you a business looking
to raise growth capital?

 

ABOUT

NOVO VENTURES IS AN INNOVATIVE VENTURE DEVELOPMENT BOUTIQUE FOCUSED UPON THE CREATION, MANAGEMENT AND GROWTH OF SCALABLE UK ENTERPRISE. OUR GEOGRAPHIC TARGETING OF BIRMINGHAM & THE MIDLANDS ENSURES WE MAINTAIN A DEEP UNDERSTANDING OF LOCAL MARKET DYNAMICS WHILST CAPITALISING ON THE EXCITING AND SUSTAINABLE GROWTH OPPORTUNITIES IN THE REGION.

Entrepreneurs not financiers

Novo Ventures is a growth partner to early stage enterprise in the UK. We are more than management consultants or growth finance specialists, we are entrepreneurs with a passion for supporting and developing exceptional venture opportunities from inception through to exit.

Birmingham based, we work across the UK looking to discover and develop exciting businesses and investment opportunities which can offer sustainable disruption or capture untapped demand in proven or growth markets. Our role is to support growth as a strategic partner who can provide strategic, commercial and technical resources to help drive development and growth.

Our collaborative and practical framework is focused on developing a deep understanding of each venture and its market dynamics to enable us to tailor a support package, whilst working closely with management to break down the business plan into focused objectives for each funding round which we can then help them deliver.

 

Our focus is people

Novo builds strong relationships with key venture partners across a wide breadth of growth sectors which enables us to both structure new opportunities alongside supporting the development and growth of existing businesses. Our focus is to work alongside competent and motivated management teams and sector specialists that can weather the storm – no venture will simply glide through their growth trajectory so ensuring we’re working with people who can thrive under pressure is essential!

We also work closely with High Net Worth individuals, family offices, financial advisers and private banks, both on and offshore, that are looking to tap into the overwhelming opportunities across Birmingham & The Midlands; here our role is not to advise on or structure investment prospects but rather to give confidence that a venture has the requisite support in order to grow and at the request of our venture clients, we can provide clear and consistent investor communication (including admin support such as EIS3 forms).

 

VENTURES

NOVO IS TAKEN FROM THE LATIN EXPRESSION ‘FROM THE BEGINNING’ AND SYMBOLISES OUR COMMITMENT TO SUPPORTING EARLY STAGE ENTERPRISE IN THE UK, WORKING TO HELP PROVIDE THE CAPITAL, EXPERTISE AND CONNECTIONS THAT CAN ENABLE BUSINESSES WITH GREAT POTENTIAL TO ACHIEVE THEIR OBJECTIVES WHILST DELIVERING INVESTOR RETURN

Supporting your business

Our approach is to find opportunities early and become a trusted resource to management teams throughout their journey, working together to realise the potential of the venture and maximise return for all shareholders. Novo is broadly sector agnostic to enable us to support a wide breadth of venture opportunities in the UK, however each must fit within our investment blueprint to ensure we can add the right expertise for your business and ensure Novo is the right growth partner for the venture itself.

There are many avenues in the UK today for young businesses to receive some or all of the finance they need to help develop or grow their business and as such, equity funding from private investors (under EIS or SEIS) may not be the optimal path. Where it is, businesses then need to ensure they choose the correct channel upon which to raise equity funding – crowdfunding for instance can seem appealing but this can come with implications for the business when raising follow-on funding alongside the administrative burden of dealing with hundreds if not thousands of small investors.

At Novo we work to support and position the business ahead of funding, ensuring the opportunity is attractive to investors at each investment stage. We then become a strategic partner to the business to help drive growth and deliver upon agreed investment milestones and strategic objectives. Novo can also provide an effective investor relations function for your business, working with you to prepare and deliver consistent and accurate communication and reporting to enable you to focus on growing the company whilst letting us look after investors on your behalf.

 

Who we work with

To maintain flexibility, we do not to apply rigid and constrictive criteria against the ventures we work with as we want to support great businesses across the spectrum, and importantly, not miss out on exciting opportunities. However, broadly all our venture clients will meet the following conditions:

  • Scalable business model and market opportunity – we look for uncapped potential which could mean working with businesses that can build operations and increase sales on a global scale (when the time is right!).
  • Disruptive product or service provision or technological innovation to existing market – although not exclusively, we focus on ventures which can use technology to make improvements to, and gain an edge in an existing market.
  • ‘Sticky’ product or service when customers/clients are acquired – winning new business is not easy so being able to retain customers is important; products or services which are harder to stop using once adopted are therefore attractive.
  • Strong management team who can deliver against agreed objectives – people run businesses and we need to know that every business we work with is led by individuals who are not just good at running the business it is today, but have the capabilities to build it into something stronger tomorrow.
  • Demonstrable competitive advantage/USP – are we looking for a bulletproof IP patent that creates a virtual monopoly? No, but we do need to understand why a customer is going to choose you and how you can retain and grow this base.
  • Clear path to exit within 3-5 years for early investors (SEIS/EIS) – an investor is looking for a financial return which is created from an exit not growth and therefore understanding the paths available is a primary factor when evaluating a proposition.
  • We must be excited by the venture – we are a hands-on venture developer so need to be highly motivated by every deal and have a desire to get deep in the mud with every venture team.
  • We must work well together as a team – the close relationship we have with every venture means we all need to get on, if we wouldn’t want to share a beer together at the end of a hard days’ graft then we’re probably not the partner for your business!

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& application pack on working with Novo Ventures


 

INVESTORS

WE WORK WITH PROFESSIONAL INVESTORS LOOKING AT VENTURE OPPORTUNITIES ACROSS A WIDE BREADTH OF SECTORS IN BIRMINGHAM & THE MIDLANDS; PROVIDING AN EFFECTIVE FRAMEWORK ON BEHALF OF OUR VENTURE CLIENTS TO ENSURE EACH INVESTORS’ TAX, LEGAL AND ADMINISTRATIVE INTERESTS ARE PROTECTED

Working with you

We’re not an investment manager, financial adviser, broker or angel network; we’re different. Novo provides a range of support services for the benefit of professional investors which typically are delivered on behalf of our venture clients. As such, Novo Ventures is not authorised by the FCA and cannot provide investment advice or any regulated services. Our primary role is to help deliver the objectives for each of our venture clients to maximise value for all shareholders and stakeholders.

For professional investors we can work on behalf of venture clients to provide an administrative function which can include the efficient turnaround of EIS3 and SEIS3 certificates whilst delivering fluid and accurate investor communication and reporting.

 

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venture clients & opportunities in the region


 

EIS

EIS RELIEF AND SEIS RELIEF ARE TWO OF THE PRIMARY TAX INCENTIVES AFFORDED BY GOVERNMENT TO STIMULATE PRIVATE SECTOR INVESTMENT INTO EARLY STAGE COMPANIES. THESE GENEROUS TAX ADVANTAGES, IF USED CORRECTLY, HAVE THE POTENTIAL TO BOTH ENHANCE INVESTMENT RETURNS AND REDUCE CAPITAL RISK

Background

The Enterprise Investment Scheme was introduced by government in 1993-94, making it one of the longest standing schemes in existence and illustrating the overwhelmingly positive impact the scheme has on our economy. To date, over £14bn of EIS capital has been injected into qualifying companies in the UK and this number has been rapidly growing over the past few years whereby we are now raising in the region of £1.5-2bn per annum, stimulated by key drivers including the mounting restrictions to pension contributions and the subsequent need to find alternative means for funding retirement, and simply the wealth of strong early stage commercial opportunities in the UK right now.

Aside from a list of excluded activities/trades, the Enterprise Investment Scheme is sector agnostic and investors are able to access EIS and SEIS investments through a variety of different channels each with their own pros and cons, these include: single company investment, EIS/SEIS funds and qualifying structured/asset backed investments.

The relief itself becomes available once an investor has acquired the shares and qualifying criteria has been met (namely that the business has been trading for at least 4 months) however there are strict HMRC (SCEC team) processes which must be adhered to involving the submission of key forms and supplementary material – this should only be done by an experienced professional to ensure errors are not made and relief is not unnecessarily withdrawn.

 

Enterprise Investment Scheme (EIS)

Income tax relief
There is no minimum investment through EIS in any one company in any one tax year. Tax relief of 30% can be claimed on investments (up to £1,000,000 in one tax year) giving a maximum tax reduction in any one year of £300,000, provided you have sufficient Income Tax liability to cover it.

EIS allowances are allocated individually; therefore a married couple could invest up to £2 million each tax year and be eligible for Income tax relief. The shares must be held for at least three years from the date of issue or the tax relief will be withdrawn. People connected with the company are not eligible for Income Tax Relief on their shares.

Capital gains tax (CGT) exemption 
Any gain is CGT free if the shares are held for at least three years and the income tax relief was claimed on them. Shares can be held for much longer and therefore potentially enable the investor to be accrue their CGT exemption over a long period of time which can be a great attraction.

Loss relief
If shares are disposed of at a loss, the investor can elect that the amount of the loss, less Income Tax relief given, can be set against income of the year in which they were disposed or, on income of the previous year instead of being set of against any capital gains.

Capital gains tax (CGT) deferral
Payment of CGT can be deferred when the gain is invested in shares of an EIS qualifying company. The gain can be made from the disposal of any kind of asset but the Investment must be made one year before or three years after the gain arose – connection to company does not matter. Unconnected investors are eligible for relief from both Income tax and CGT referral relief.

Inheritance tax relief
After two years from the investment date, EIS qualifying companies generally fall outside the estate for IHT purposes under Business Property Relief (BPR) thus providing an effective estate planning tool on top of the core tax advantages for EIS.

 

Seed EIS (SEIS)

Income tax relief
Tax relief of 50% can be claimed on investments (up to £100,000 in one tax year) giving a maximum tax reduction in any one year of £50,000 under SEIS alone, provided you have sufficient Income Tax liability to cover it.

SEIS allowances are allocated individually. The shares must be held for at least three years from the date of issue or the tax relief will be withdrawn. People connected with the company are not eligible for Income Tax Relief on their shares.

Capital gains tax exemption (SEIS gains)
Any gain is CGT free if the shares are held for at least three years and the income tax relief was claimed on them. Shares can be held for much longer and therefore potentially enable the investor to be accrue their CGT exemption over a long period of time which can be a great attraction.

Loss relief
If shares are disposed of at a loss, the investor can elect that the amount of the loss, less Income Tax relief given, can be set against income of the year in which they were disposed or, on income of the previous year instead of being set of against any capital gains.

Capital gains tax (CGT) exemption (existing gains)
Payment of CGT can be cut in half if the full gain is invested in shares of an SEIS qualifying company. The gain can be made from the disposal of any kind of asset but the investment must be made one year before or three years after the gain arose.

Inheritance tax relief
After two years from the investment date, EIS qualifying companies generally fall outside the estate for IHT purposes under Business Property Relief (BPR) thus providing an effective estate planning tool on top of the core tax advantages for SEIS.

 

Excluded trades
  • Dealing in land, in commodities or futures in shares, securities or other financial instruments
  • Dealing in goods, other than in an ordinary trade of retail or wholesale distribution
  • Financial activities such as banking, insurance, money-lending, debt-factoring, hire-purchase financing or any other financial activities
  • Leasing or letting assets on hire, except in the case of certain ship-chartering activities
  • Receiving royalties or licence fees (though if these arise from the exploitation of an intangible asset which the company itself has created, that is not an excluded activity)
  • Providing legal or accountancy services
  • Property development
  • Farming or market gardening
  • Holding, managing or occupying woodlands, any other forestry activities or timber production
  • Shipbuilding
  • Coal production
  • Steel production
  • Operating or managing hotels or comparable establishments or managing property used as an hotel or comparable establishment
  • Operating or managing nursing homes or residential care homes, or managing property used as a nursing Home or residential care home
  • All energy generation activities (from 6 April 2016)
  • Providing services to another person where that person’s trade consists, to a substantial extent, of excluded activities, and the person controlling that trade also controls the company providing the services

A company can carry on some excluded activities, but these must not be ‘substantial’ part of the company’s trade.

 

Key points to consider
  • Liquidity – aside from the three year holding rule, there is no secondary market for EIS/SEIS shares and therefore it is likely investors will have to wait for a sale or listing of the company to realise a liquid return from their shares. Alternative exit routes such as an MBO may also be available depending on the individual company.
  • Are you connected with the company? Individuals looking to subscribe for EIS or SEIS qualifying shares cannot be connected with the company anytime 2 years before and 3 years after the issue of EIS shares else relief will be withdrawn. Please click here for additional information on what HMRC classifies as being connected.
  • Claiming your relief – sadly the work is not done once shares are issued as a strict administrative process must be adhered to when dealing with the Small Companies Enterprise Centre at HMRC who run the EIS scheme. All steps, including the Advance Assurance application, should be administered by an experienced professional.
  • Steer clear of preferences – all shares must be full risk, ordinary shares and they must also be fully paid up in cash before issued (one of the most common reasons for individuals losing tax relief is by receiving shares before they have actually transferred funds).
  • Capital still risk – perhaps stating the obvious but however generous the EIS and SEIS tax reliefs are, should your investment fail you will still lose capital. Sadly there will always be investments or schemes in the market which wrongly put the tax benefits ahead of the investment merits, so it is always good to remember that you can’t make money from just the tax and a bad investment is still a bad investment regardless of the tax benefits!

 

 

ARTICLES

WE LOOK TO PROVIDE A RANGE OF INSIGHTS AND USEFUL INFORMATION TO BOTH OUR INVESTMENT COMMUNITY ALONGISDE ENTREPRENEURS AND COMPANIES SEEKING VENTURE FINANCE OR DETAILS ON EIS AND SEIS MORE GENERALLY. THE OPINIONS WITHIN THE ARTICLES POSTED REFLECT THOSE OF NOVO VENTURES AND SHOULD NOT BE USED AS INVESTMENT GUIDANCE

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CONTACT

Novo Ventures Limited
50-54 St Paul’s Square
Birmingham
B3 1QS

Email: info@novoventures.co.uk
Tel: +44(0) 121 212 9106

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