The companies that are going to thrive during and after this crisis will be the ones that best adapt and respond to the challenges that emerge. Over the coming months we expect there to be more opportunities to invest in high quality, better capitalised companies with lower valuations. Here are the reasons why now is great time to invest in a VCT:
Time for innovation: Times of great change create significant opportunities for entrepreneurs to innovate. We saw this during the 2007-2009 financial crisis, when many companies went on to become Unicorns (worth $1bn plus), such as Uber and Slack. Others will be born in the next year as a result of innovative thinking and adoption of new technologies.
Lower valuations: The economic uncertainty created by COVID-19 and the volatility in the stock markets is leading to lower valuations in the venture funding market. After 2008, valuations declined by between 15%-to-40%. Now is the time for investors and funds to make the most of this.
Talent: It’s a good time to hire great people. During times of weaker labour markets and instability, businesses have better access to the skilled human talent that they need, and possibly also at a lower cost.
Equity-based funding: All our funding has been equity-based, and the majority of our companies have little or no debt. One feature of venture capital funding is that it is equity, not debt, driven. It is often excess debt that can cause a company to run into difficulty when revenues are impacted.
Technology-first businesses: All our portfolio companies, being technology-first businesses, can operate effectively with remote, or home working and few of them depend heavily on the regular physical presence of staff in one specific location.
Lower costs: Key costs for start-ups such as rent and marketing are currently in decline. This provides an opportunity as it means that growth companies will be able to do more with less.
Tax advantages: Tax advantages: Don’t forget, depending on your individual circumstances, if you invest in a VCT you can claim up to 30% upfront tax relief and tax-free dividends along with all the potential upside of investing in an early stage growth company."
Triple Point’s Venture Fund VCT targets significant capital growth by investing in early stage innovative companies typically at the point at which they obtain market validation. This strategy aims to mitigate some of the risks of early stage investing whilst helping early stage businesses increase their chances of success.
By focusing on early-stage businesses which have established a market fit for their products and services with established corporates, Triple Point aims to address some of the risks of early stage venture capital and can enhance investors chances of securing a robust return on their investments.
Triple Point has a 15-year track record as an established VCT manager, with £260m of VCT and EIS exits to date. As Triple Point’s 20th VCT fundraise to date, this share class looks to target income and capital growth by drawing on a distinctive ‘Challenge Led’ investment approach."
Risk warning: The Triple Point Venture Fund VCT carries all the risks of investment in smaller companies and places investor’s capital at risk. There is no guarantee that target returns will be achieved, and investors may get back less than they invested. Past performance and forecasts are not a reliable indicator of future performance. Tax treatment depends on the individual circumstances of each client and is subject to change. Tax reliefs depend on the VCT maintaining its qualifying status.
This financial promotion has been issued by Triple Point Administration LLP which is authorised and regulated by the Financial Conduct Authority no. 618187.
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