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Oxford Capital named as finalist for Tax Efficiency Awards

Investment Week has named Oxford Capital as a finalist in two categories in this year’s Tax Efficiency Awards.

The Tax Efficiency Awards are designed to recognise the most successful and forward-thinking providers in the areas of VCTs, EIS and BPR/IHT. The awards will also recognise investment providers who have helped to cultivate a greater understanding of the tax-efficient sector and its benefits and who work hard to communicate these to clients and advisers.

The Oxford Capital Estate Planning Service (OCEPS) has been shortlisted for the ‘Best IHT Portfolio Service’ award. The OCEPS can be used to shelter part of an investor’s estate from Inheritance Tax and has recently been rated ‘85’ by both Allenbridge and Tax Efficient Review.

Our sale of Oxitec has also been named as a finalist in the ‘Exit of the Year’ category.

Oxitec is a company that could save and improve lives all around the world. It has the potential to do so in part because it received EIS funding, and it had the support of Oxford Capital as it transitioned from university spinout to commercial enterprise.

The acquisition of the company by Intrexon Inc in August 2015, in a deal which valued Oxitec at more than £100m, gives Oxitec a platform to continue expanding its business, addressing health challenges in numerous countries. Oxitec’s story shows how EIS investment can be a powerful catalyst, turning the UK’s scientific expertise into valuable and globally important companies.

The Zika crisis has recently shone the spotlight on Oxitec and its extraordinary approach to controlling disease-carrying insects. Oxitec breeds male mosquitos that cannot survive to reproductive age. When released into local populations, these sterile insects mate with native females, diminishing the next generation. The technology has the potential to address not just Zika, but other insect-borne diseases such as dengue fever and malaria, as well as controlling insects that destroy food supplies. It can replace chemical pesticides, which are less effective than Oxitec’s solution and cause damage far beyond the target species.

The awards will be judged by a panel of industry experts, and the winners will be announced at a ceremony in London on 2 December 2016.

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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.