Highgate Tech Fund

The EIS fund that breaks the mould hits an initial £500K funding target within one week of launch and identifies its first investment target.

London 23 March 2010 – Highgate Associates and Enterprise Corporate Finance announces today that its EIS Fund, the Highgate Tech Fund has reached the initial minimum funding target in record time.  Further investment is anticipated during the final weeks of the tax year by investors looking to maximise their tax benefits.

In addition the Fund announces today its first High Tech company investment, iVoucher, an early stage business that is developing a unique SaaS (Software as a Service) delivered, proprietary SMS technology for the food and beverage industry. iVoucher has a distinctive technology and service proposition that is planned to launch later in Q2 2010 that will enable all bars and restaurants to effectively communicate with their customers and build one to one relationships that drive greater revenue and improved customer experience.

The Highgate Tech Fund offers a different approach to most EIS funds and will invest 100% of the funds raised into a portfolio of companies ensuring that investors receive the full benefit of their initial EIS relief. All money raised in the Fund will be transferred into shares across the portfolio of companies selected for investment by the Fund managers. The Highgate Tech Fund is managed by Technology Industry veterans, a team of entrepreneurs who have been successfully established, grown and exited high tech businesses globally for profit. The businesses receiving investment from the Fund will benefit from this level of expertise to support the achievement of their business plans and forecasts. When the Fund closes at the end of July, the management team aim to achieve a portfolio of between 6 and 8 early stage high tech businesses including iVoucher, selected for investment based on clear acceptance criteria and extensive due diligence.

The initial success of this Fund has been driven by the ‘famous 5’ EIS tax breaks, as well as the distinctive and clearly attractive approach to fund management fees, which focuses on minimising the cost to investors and maximising the investment into the selected businesses. The Fund managers will not participate in fees from investors until the Fund has delivered a minimum of 6% annualised return.

Mr Andrew Muir, Highgate Tech Fund Manager says “we are delighted to have hit this first target in record time, only one week after the initial launch. The tax benefits of investing in an EIS Fund before the first close date of 4^th April are excellent for investors who still want to be involved. The Fund Memorandum explains the Fund and benefits in detail for those who are interested. “

The Highgate Tech Fund is still open to sophisticated investors with £10,000 or more to invest in a portfolio of early stage high technology companies and has a first close date of 4^th April 2010 and final close of 31^st July 2010. This is a medium to long term investment opportunity with a 3-7 year exit strategy.

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For further information please contact Andrew Muir on 07785 393583 or amuir@highgatetechfund.com or visit www.highgatetechfund.com

Highgate Associates

Highgate Associates was established in 2001 by Andrew Muir and Ken Nelson, each having over 25+ successful years dedicated to starting and building technology companies globally. 

Andrew Muir and Ken Nelson co-chair the Fund Investment Committee and work closely with Enterprise in allocating EIS funds to the investee companies and managing the Fund investments. Highgate’s senior Financial Director, Henk Nieuwenhuizen, oversees all investments made by the Fund to ensure proper accounting and disclosures.

Highgate deploys a very focused hands-on approach to the HG Tech Fund EIS investments, taking an active role in monitoring the performance of management teams within the investee companies in the form of reviews with the Investment Committee members as well as attending AGM and other general meetings to hear first hand from the management as to the progress of the company. Of particular interest is close scrutiny of the exit strategy and opportunities for returns to Investors that may arise during the company’s investment period. Highgate will take board positions and financial roles in the investee companies, as necessary. www.highgateassociates.com

Enterprise Corporate Finance Limited

Enterprise Corporate Finance Limited is an investment adviser specialising in and predominantly working with unquoted investments. Its principal, Susan Phillips, has a background in investment management and for 17 years has specialised in financing, advising and mentoring unquoted companies across a wide range of industries. Susan is a recognised leader in the EIS community and acts as Director General of the EIS Association. www.enterprisecf.com

Authorised and Regulated by the Financial Services Authority

Enterprise Corporate Finance Limited is authorised and regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS. This information is communicated on the basis that participants in investments managed or advised by Enterprise Corporate Finance Limited should be sufficiently expert to understand the risks involved and understand that they may not be covered by the rules and regulations made for the protection of investors in the UK. Past performance may not necessarily be repeated and is no guarantee or projection of future results. This is not an invitation to invest. Any investment must be made on the application form and on the terms set out in the Investment Memorandum dated March 2010.

Your attention is drawn to the risk factors on page 21. Unquoted investments can be difficult to sell and it can be difficult to obtain accurate information as to their worth or risk profile. This communication is provided for informational purposes only and should not be construed as an invitation or offer to buy or sell any investments. No recommendation is made, positive or otherwise, regarding individual investments. Any decision to invest should be made only on the basis of the relevant documentation for each investment. No contracts may be concluded on behalf of Enterprise Corporate Finance Limited by means of email communications. This information in this document and any attachments, is confidential and may be legally privileged. It is intended only for the individual or entity named.

Summary of benefits provided by the Enterprise Investment Scheme

20% Tax Relief. Up to £500,000 per individual may benefit from 20% income tax relief. For each £10,000 of investment, the actual cost is £8,000. Recent changes in legislation allow the whole of this allowance to be carried back to the previous tax year for offset against income tax i.e. a theoretical £1m could be invested of which £500,000 could be carried back to the last tax year. With increasing rates of tax and restrictions on pensions contributions from the 2010/11 tax year and beyond, this opportunity may be increasingly attractive for tax planning. Shares must be held for a minimum of 3 years from the date they are issued to the Investor for this relief to be available.

No Capital Gains Tax provided the shares are held for a minimum of 3 years, there is no CGT due on the proceeds. However, the shares can be held for much longer, to realise the investment potential, thus continuing sheltering gains from CGT. Whilst the Fund intends to provide an exit to investors through the appropriate mechanism for each investee company, this relief should enable investors to shelter substantial capital gains.

Inheritance Tax has been dubbed the ‘optional tax’ and many individuals today are exposed to potential IHT bills, largely because of relatively high property prices. However, high earners are potentially more exposed. After two years from the investment date, EIS qualifying companies generally fall outside the estate for IHT purposes, potentially allowing considerable assets to be preserved intact for dependants.

Loss Relief applies in the event a share were to become worthless, the loss could be offset against income tax. Using the same example, the £8,000 net cost could be offset against that year’s tax bill, or the previous tax year’s (assuming a 40% taxpayer) allowing £3,200 to be claimed back so the actual loss would be £4,800. In other words, 48p in the pound is the maximum exposure i.e. less than half the original outlay is at risk. For a 50% tax payer, the same relief mitigates downside exposure to 40p in the pound. Losses can also be offset against CGT at the prevailing rate, currently 18% in either the current tax year or subsequent tax years. In this case, the maximum exposure would be in the order of 66%.

CGT Deferral Relief is also available in addition to the above and is not capped at £500,000. This allows up to three-year-old capital gains tax to be rolled over into EIS Qualifying Companies and potentially be further reduced by other tax allowances over a period of time, such as timing disposals in order to utilise annual CGT allowances and inter-spousal transfers to maximise tax efficiency.

Further details are set out in Appendix 1 of the Highgate Tech Fund information memorandum which can be downloaded from www.highgatetechfund.com, however, tax reliefs do depend on individual circumstances and potential investors should consult their financial adviser.