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Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment. Take 2 mins to learn more.

Conserative Manifesto and EIS: Conservative Manifesto declares ongoing support for EIS and UK innovation

The Manifesto published today reinforces the importance of supporting UK startups beyond Brexit, through both the Enterprise Investment Scheme (EIS) and funding commitment for the British Business Bank (BBB).

Specialist investment manager Oxford Capital welcomes this public declaration of support for digital businesses and entrepreneurs. Commenting on the Conservative Manifesto, David Mott, Managing Partner, said:

Conserative Manifesto and EIS:
The UK’s digital entrepreneurs will be buoyed by the continued support from political leaders post Brexit. We have seen the scale of ambition of entrepreneurs rise significantly over the past five years and the Conservatives recognise this. It is no longer enough to build a business and sell it to the Americans. Many are now looking to list their businesses here in London and plan to lead them for the longer term. For investors, the Enterprise Investment Scheme (EIS) offers the opportunity to support some of the best entrepreneurs while benefiting from a generous package of tax advantages.

On the support for the British Business Bank:
More funds for the BBB is a welcome commitment for entrepreneurs and for all those risk takers that support them. With more branches around the region, companies will have greater access to capital and support. London’s digital economy is strong and has a fantastic density of talent and ideas. But this is not limited to within the M25. For example we backed Outplay Entertainment, a mobile games company in Dundee that has seen fantastic growth. And Push Doctor, in Manchester, that is the leading consumer business connecting patients and GPs.

The full Conservative Manifesto can be read here.

Estimated reading time: 2 min

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    1. If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
  2. You are unlikely to be protected if something goes wrong
    1. Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
    2. Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
  3. You won’t get your money back quickly
    1. Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    2. The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    3. If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    1. Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    2. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. https://www.fca.org.uk/investsmart/5-questions-ask-you-invest
  5. The value of your investment can be reduced
    1. The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    2. These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

 

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.